Britain's first new nuclear plant in 20 years: David Cameron accused over guaranteed energy prices for foreign investors

Prime Minister accused of freezing future prices for large companies but not for consumers

Electric pylons linking the Hinkley Point Nuclear Power Station to the National Grid (Getty)

The Prime Minister has hailed as "brilliant news" the multi-billion pound deal to build the UK's first new nuclear power station in 20 years. But Labour accused David Cameron of defending the "ridiculous position" of setting future energy prices for large companies, whilst rejecting Ed Miliband's proposed energy price freeze.

The power station agreement announced today includes a controversial Government guarantee that investors will get more than £92.50 per megawatt hour of energy produced - double the current market price.

That figure could fall by £3 if another mooted development at Sizewell goes ahead.

David Cameron claimed the deal, with French energy giant EDF, will bring £16 billion of investment into the country, and create 25,000 jobs. The Government also stressed that the guaranteed "strike price" will have no impact on people's bills until the new plant starts working in the early 2020s.

The deal will see EDF and two Chinese firms fund the construction of a new generation reactor at Hinkley Point, Somerset - the first new nuclear power station to be built since Sizewell B, on the Suffolk coast, which started generating electricity in 1995.

Last month Mr Miliband, the Labour leader, promised an incoming Labour government in 2015 would freeze energy prices for 20 months.

Mr Cameron dismissed the pledge as a "con," though it is doing well in opinion polls. He encouraged consumers instead to switch suppliers to keep bills down.

Shadow energy secretary Caroline Flint said today that Labour supported nuclear power, but added: "David Cameron is now in the ridiculous position of saying that they can set prices 35 years ahead for the companies producing nuclear power, while insisting they can't freeze prices for 20 months for consumers while much-needed reforms are put in place."

Today’s agreement will not be legally binding because the terms of the deal, which involves state aid, still have to be approved by the European Commission. A final investment contract is expected to be signed in the summer of 2014.

Mr Cameron said: "This deal means £16 billion of investment coming into the country and the creation of 25,000 jobs, which is brilliant news for the South West and for the country as a whole.

"As we compete in the tough global race, this underlines the confidence there is in Britain and makes clear that we are very much open for business.

"This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer term security of supply".

The energy Secretary Ed Davey insisted the deal was crucial, and that he had secured value for money with the deal.

He said: "We think it would be good value if (the strike price) was a little higher. I was determined to get them below £90 so I could prove to everybody we had got a good deal.

"What has driven a tougher deal is the fact that I made clear we could walk away from the table. We had other nuclear options."

He later told BBC Breakfast: "We have got to make these investments, though, because nearly two-thirds of our electricity generating capacity is going off line over the next 15 years so we have got to replace it, we have got to replace eight out of nine of our nuclear power stations, and almost all our coal power stations.

"If people at home want to be able to keep watching the television, be able to turn the kettle on, and benefit from electricity, we have got to make these investments."

The deal comes as consumers react to a series of energy price hikes.

Last week Scottish and Southern Electricity announced an 8.2 per cent price rise, and British Gas followed that with the announcement that its electricity prices were to surge by 10.4 per cent and its gas prices by 8.4 per cent from 23 November. The latter rises would mean £125 a year added to the bills of almost eight million customers.