Disagreements between Boris Johnson and Rishi Sunak over the cost of investment in new nuclear power stations have forced the government to again delay its energy security strategy.
The prime minister promised to publish the strategy this month after Russia invaded Ukraine. Its publication has been repeatedly put back amid cabinet disagreements over fracking, onshore wind and the extent of government support for energy efficiency projects.
Senior sources told The Times that while most issues had been settled, disagreements between No 10 and the Treasury over the extent to which new nuclear power should feature in the plan caused the latest delay.
Last week Johnson told nuclear industry bosses that the government wanted the UK to get 25 per cent of its electricity from nuclear power, requiring up to six new large-scale stations.
Sunak is understood to be concerned at the cost of such a commitment, arguing it represents poor value and would lead to substantial long-term increases in energy bills. He is thought to be pushing Johnson to limit the government’s commitment to two plants on top of one being built at Hinkley Point.
Advertisement
The Treasury is arguing that there are other cheaper alternatives to nuclear to provide a “base load” of power for times when generation from renewables falls or demand is at its peak.
This could include hydrogen and gas generation using carbon capture and storage, alongside greater investment in electricity storage technology to even out supplies from renewable power.
Sunak told the Treasury select committee there were complicated issues that needed to be assessed. “I’m certainly not blocking anything,” he said. “The PM is continuing to work through the details of that. Given how important it is, I think it’s important that we get it right. It’s being worked on at pace.”
The Treasury’s argument has been boosted by the National Infrastructure Commission that has warned large-scale nuclear power plants are “incredibly difficult to deliver on short timescales”.
• Spin for victory: are you ready for more wind turbines?
Advertisement
It has pointed out that even if the government gave the go-ahead for more nuclear power stations and they took as long as the Hinkley Point C project is expected to take, they would not come online until the mid-2040s. They have urged ministers to look at “alternatives” that are more likely to be deliverable at scale in the next 15 years.
Ministers are legislating for a new model to fund nuclear power plants to make them attractive to investors. But critics say the regulated asset system would place the burden for delays and cost overruns on consumers and increase energy bills.
Supporters of new nuclear power, including Johnson and Kwasi Kwarteng, the business secretary, argue that investing now is a “no regret” policy as demand for electricity is forecast to double in the transition to net zero. It is understood the strategy is now due next week. If that slips, the Easter recess and rules on what the government can say before the May elections could push it beyond the Queen’s Speech.
Petrol prices fail to reflect fuel duty cut
Petrol stations have been accused of pocketing the chancellor’s cut in fuel duty by failing to pass savings onto drivers (Ben Clatworthy writes).
Advertisement
Rishi Sunak, the chancellor, used his spring statement last Wednesday to announce a 5p-per-litre cut in duty.
Pump prices should have fallen by 6p because of the cut in the VAT owed; but the average price at UK forecourts has fallen by 3.7p per litre.
New figures from Experian Catalist, the data firm, show that the average price of a litre of petrol was 163.6p on Sunday, compared with 167.3p on March 22. The average price of diesel fell by 2.4p from 179.7p to 177.3p.
Luke Bosdet, the fuel price spokesman at the AA, said: “The fuel trade always disputes the accusation that pump prices shoot up like a rocket and fall like a feather. Now we know the truth.”
Bosdet said the Treasury “must have expected more from UK forecourts”.
Advertisement
The big supermarkets were quick to pass on the savings to customers, prompting hopes that smaller garages and independent retailers would follow suit.
Asda was the first big retailer to confirm it would slash the cost of petrol and diesel on the day of Sunak’s statement. Sainsbury’s also dropped prices on its 315 forecourts by 6p while Morrisons said it would pass on the 5p duty cut to motorists. Tesco and BP have cut prices by 6p.
“Drivers will be disappointed that prices haven’t come down further since last week’s fuel duty cut,” Rod Dennis, of the RAC, said.
“As duty is charged on the wholesale cost of fuel, it’s the case that some retailers will be waiting for new deliveries in order to buy fuel in at the cheaper rate — meaning drivers will have to wait to see the benefit at the pumps.”
