Widespread reports in the media are suggesting that the Government is set to reject plans for a tidal power lagoon in Swansea Bay this week.

Leading financial newspaper the Financial Times has reported that this week Ministers intend to reject the plan to build a £1.3 billion tidal power lagoon in Swansea Bay on the grounds that the level of subsidy that Tidal Lagoon Power is seeking from the British taxpayer is too high.

According to the FT, Carwyn Jones, first minister of Wales, said the rejection of the lagoon project would be “another kick in the teeth” for the people of Wales and has pledged the continuing support of the Welsh Government for the scheme, saying:

“The Welsh Government remains committed to the Swansea Bay Tidal Lagoon and we stand ready to provide significant financial backing to help make it a reality.”

Last month the Business, Energy and Industrial Strategy (BEIS) Committee and the Welsh Affairs Committee launched an inquiry to investigate delays and obstacles in the decision-making process for the Swansea Bay Tidal Lagoon project.

The Committees have been examining the steps and stakeholders involved in the decision process and the reasons for the Government’s failure to reach a decision on whether it will support the Lagoon, since exploratory discussions with the Government began in 2013.

In the first of two planned sessions for the inquiry, the Committees heard from witnesses including Rt Hon Charles Hendry, author of an independent review into the planned Swansea Bay Tidal Lagoon, and from the RSPB, Tidal Lagoon Power, energy consultancy Aurora Energy Research Ltd, and from Natural Resources Wales and The Crown Estate.

At a second session, the Committees will question stakeholders and Ministers from the Welsh and UK Governments on progress made towards reaching a final decision.

“A tale of indecision with the Government dithering” for five years

Rachel Reeves, BEIS Committee Chair, said:

"The Swansea Tidal Lagoon project has been a tale of indecision with the Government having dithered over this for five years and still to reply to the Hendry Review, published over a year ago.

"The Government’s consistent failure to give a clear indication of whether they will provide taxpayer support has left investors in limbo.”

“In this inquiry, we are keen to explore the decision-making process, to get clarity on the next steps for the Swansea Bay Tidal Lagoon, and how government can learn the lessons for future projects of this kind.”

“If the Government wants to go ahead with this project, then it needs to say so urgently. If not, then it must get on with it and let the public and investors know of its intentions."

Costs and benefits of the project assessed

David T.C. Davies, Welsh Affairs Committee Chair, said:

"At this point, the Swansea Tidal Lagoon has that all too familiar feeling of an infrastructure project which appears to offer much, but there are still serious questions to be asked about the value for money of the project, and possible environmental impacts.

We are looking forward to hearing from Tidal Lagoon Power and a range of interested parties – both those in favour and those sceptical of the Lagoon – to better understand the true costs and benefits of project.”

Without backing from the Welsh and UK Government the Tidal Lagoon will not progress - the Welsh Government has offered funding to kick-start the project.

Impact of delay - TLP CEO says 3 companies in its supply chain have gone into administration

Asked about the impact of the delays, Mark Shorrock, Chief Executive, Tidal Lagoon Power told members of the Committee that externally three companies in its supply chain had gone into administration, commenting:

“The impact externally to us has been to see Rowecord, Davy Markham and some of these big heavy engineering firms go down, and we could have been a lifeline to them.”

Internally, TLP had also to let go a number of staff, although it has held on to all of its core delivery capability.

A yes from Government would enable the company to launch the final competitive tender for the marine and civils package.

Mark Shorrock added:

“It is very costly. We are a private sector business. We are owned by 440 ordinary shareholders. They have continued to support the business, to make sure we could get to a decision. It is a burn rate of some several hundred thousand pounds a month to maintain.”

Ed Davey warns rejection would be an "historic mistake"

A spokesman for the Department for Business, Energy and Industrial Strategy said:

“As the Business Secretary told MPs recently, while we have quadrupled the proportion of our electricity that comes from renewable sources since 2010, we have a responsibility to minimise the impact on consumer bills and the Swansea proposal is more than twice as expensive as the Hinkley power station.

“Any decision on the Swansea Bay tidal lagoon project will have to represent value for money for the UK taxpayer as well as the consumer.”

According to Liberal Democrat former energy secretary Sir Edward Davey, tidal lagoons are the obvious next step in Britain’s renewable power revolution. He warned that a decision by the Conservatives to reject the Swansea Bay pilot against all the evidence would be an “historic mistake.”

“This will mean more expensive electricity in the future for British consumers and leave others to lead the world’s tidal industry. The opposite of what we thought ministers meant by Industrial Strategy.”