Hammond says Hinkley Point is vital despite cost blowouts

The new chancellor has affirmed the government’s commitment to building a new nuclear power station at Hinkley Point in Somerset, despite the possible cost of the electricity it will generate rising significantly.

Philip Hammond said on Thursday that Hinkley Point was still worth the huge expense, describing it as “vital” to the economy.

The new power station - being built in partnership with French state energy giant Électricité de France and Chinese state entity China General Nuclear Power Corporation.

It was initially supposed to cost £6bn, but has since blown out to £18bn at its last estimate.

A 35-year deal was signed with EDF in 2013, whereby the government would pay £92.50 for each megawatt hour of electricity, paving the way for the plant’s construction.

But electricity prices on the wholesale market have fallen significantly since the price was agreed, with the government now left to make up the difference.

A recent report from the National Audit Office estimated top-up payments would rise from £6.1bn at the start of the contract, to £29.7bn by the time it expires.

That report came just days after the Department of Energy and Climate Change published research putting the potential cost of the plant at a mammoth £37bn.