The hon. Gentleman mentions contracts for difference and he also did so in his speech. That is my major criticism of the Government, because when people are thinking about investing for 40 or 50 years it is important that we try to mitigate the risks as much as possible. That is presumably the rationale behind contracts for difference.
As I have said, I have a power station in my constituency and want another one, but we still have great uncertainty about how CFDs will operate, including about the length of contracts, how contracts will be allocated or paid for and the process for setting the reference and strike prices. In such circumstances, investors who want to invest for the long term are naturally jittery. In its report on planning for economic infrastructure last month, the National Audit Office identified policy uncertainty as a key risk, concluding that such uncertainty
“could result in project sponsors, lenders and contractors deferring or abandoning UK projects in favour of opportunities elsewhere. Financing charges for projects may rise as investors and lenders perceive policy uncertainty as a risk.”
That certainly seems to have happened in the nuclear sector, with the loss in recent years of E.ON, RWE and SSE, and now Centrica.
I mentioned that I was reading the Lex column in the Financial Times this week, and it concluded:
“low-carbon nuclear must be part of the global energy mix. If governments want to attract private capital, they must be more realistic about pricing, cost and regulation.”
That is as true for the UK sector as it is for the global energy mix.