Hinkley Point branded nuclear 'white elephant' by former civil service chief

George Osborne rejects accusations during grilling by Lord Turnbull

George Osborne has rejected accusations from a former head of the civil service that his plans for a new nuclear power station at Hinkley Point in Somerset would create a “big white elephant” and a “bottomless pit”.

At a grilling of the Chancellor by the House of Lords’ Economic Affairs Committee, Lord Turnbull – who was Cabinet Secretary between 2002 and 2005 – pointed out that since the coalition government struck a deal in 2013 with EDF and Chinese investors to build the UK’s first new nuclear plant in two decades, the price of oil had collapsed and the French energy company had run into serious technical problems with its reactor design.

“It’s not ‘can we do the deal’ but ‘should we do the deal’” he suggested. “This thing at £92 per kWh is turning out to be incredibly expensive and a huge commitment and for a design which the French can’t get to work.

“Shouldn’t we really go back to the drawing board, rather than plumping for what I think will be a kind of bottomless pit and a big white elephant?” Lord Turnbull, who was also Permanent Secretary to the Treasury between 1998 and 2002, suggested that the Government ought to use gas as an interim source of energy while the problems of nuclear were addressed.

In response, Mr Osborne suggested the £92 strike price at which the Government agreed in October 2013 to buy nuclear energy from EDF from Hinkley was not set in stone. “When it comes to the strike price, that is all, of course, subject to final negotiation” he said. Mr Osborne added: “It’s still substantially cheaper than other low-carbon technology such as offshore wind and onshore wind.”

Asked why he did not follow the successful South Korean model of building new reactors directly, Mr Osborne stressed that he did not want the construction costs to be on the Government’s balance sheet.

“That means, inevitably, that there are certain complex arrangements for guaranteeing certain prices. But it does mean I’m not bearing the construction risk or the design risk. At the moment getting the reactor design approved is the responsibility of EDF.”

Mr Osborne suggested that EDF, which is majority-owned by the French state, had a powerful incentive to overcome the technical problems that have beset its European Pressurised Reactor. “There’s a huge amount riding on this for EDF in getting this working – not just here but in Flamanville [the plant in France where serious problems have been identified]” he said.

Mr Osborne added that he was “pretty confident” that a final deal for the £24.5bn plant would ultimately be done, adding that he was shortly due to visit China to discuss the project.