Nuclear packs vital economic punch

Nuclear does what it says on the tin: it delivers clean, affordable, firm power which strengthens energy security by reducing our reliance on fossil fuels, helping to make significant strides towards net zero. It’s why policymakers want to embark on another golden age of British atomic innovation with a huge ramp up of new nuclear. But there’s more to nuclear than meets the eye.

With work underway to meet the government’s 24 GW of nuclear by 2050 target, the wider benefits of the sector will become much more clear-cut as communities and the supply chain start to feel the effects of major new projects. Just look at what Hinkley C has done for the South West economy, having already delivered £4 billion worth of investment, with more than 8,000 people working on the construction site and over 1,000 apprentices trained. The numbers are truly impressive.

To understand the wider economic contribution of the industry, the NIA, thanks to independent analysis undertaken by Oxford Economics, has, for the time since 2017, produced a comprehensive study of civil nuclear industry’s economic contribution.

The Delivering Value report shows that in 2021, the industry generated £6.1 billion in GDP for the UK economy, around twice as much as the air transport industry. When the indirect impact of the sector’s activity is taken into account, that figure more than doubles to a whopping £16.1 billion. The direct impact, also generated substantial sums in taxes paid to the Exchequer, with the report estimating the sector paid around £4.5 billion in tax payments in 2021, rising to £7.1 billion when associated spend is included.

If the country is serious about supercharging new nuclear projects, these numbers should reach new heights with nuclear a major contributor to the green economy.

Key to that will be green jobs. The sector is already a vital green job creator, with more than 64,000 people directly employed, a figure which jumps to 211,000 when taking into account jobs that are reliant in some way on the sector’s activities. Additionally, it supports one in every 148 jobs across the UK, and around £1 in every £49 of economic output for both the north west and the south west of England.

The average civil nuclear worker generates £102,500 of GVA (Gross Value Added), a rate almost twice as high as the UK median figure. This level of productivity puts employees of nuclear firms within the second most productive 10% of the UK workforce.

Since every single nuclear station in operation and decommissioning is in coastal Britain, nuclear brings jobs and investment to some of the most deprived parts of the country. In England, almost 40% of direct employment in the sector occurs in the most deprived 25% of local authorities. In Scotland, that figure is close to 50%, making nuclear vital to the levelling up agenda.

The report shows the largest economic impact was felt in the North West, home to Sellafield, the National Nuclear Laboratory and Heysham power stations, as well as Urenco at Capenhurst and Springfields fuel plant. Some £3.9 billion in GVA was contributed by the sector across the region in 2021 equivalent to 2.1% of all regional output. The South West, home to the Hinkley Point C, saw the next largest impact, totalling £2.6 billion, an increase of 60% compared to 2016.

As well as being an important contributor to the economy, nuclear remains an integral part of the electricity mix, but there is work to be done. Around 15% of total electricity produced in Britain comes from nuclear power, down from around a fifth in 2016. It is the second largest source of low carbon electricity in the UK, providing a backbone of firm, clean power alongside renewables.

However, with two thirds of all dispatchable power capacity be retiring by 2030, including all but one of our current nuclear stations, this will need to the replaced with a new nuclear fleet to continue providing the reliable, low carbon power the UK will need if it is to keep the lights on and hit net zero.

As is shown in the South West, new build projects bring with them significant economic benefit, and coupled with the progress being made in decommissioning, they have helped develop UK capability across the supply chain. There is also significant opportunity for the sector to be world leaders in the development of Small Modular Reactors, a global market which could be worth hundreds of billions of pounds.

There is, though, much work to be done. The vision of Great British Nuclear, set out in the Government’s Energy Security Strategy, could signal the start of a new atomic age for Britain. But we need to act urgently so we can maximise opportunities and help improve productivity, foster innovation and reduce costs, so we can continue to deliver economic benefits for generations to come and make Britain a nuclear energy powerhouse.