Plans for Britain’s first nuclear reactor in almost 30 years have come under sustained attack from politicians and City bankers.

A report from a top bank this weekend warned that the cost of the £25billion Hinkley Point C plant was ‘becoming harder to justify’.

HSBC concluded: ‘We see ample reason for the UK Government to delay or cancel the project.’

Under attack: Plans for Britain’s first nuclear reactor in almost 30 years have come under sustained attack from politicians and City bankers

And former Tory Energy Secretary Lord Howell of Guildford – the self-described ‘pro-nuclear’ architect of a drive into nuclear power under Margaret Thatcher – has told the House of Lords that the reactor plan in Somerset was ‘one of the worst deals ever for British households and British industry’.

He added that he would ‘shed no tears if it was abandoned’.

Plans for Hinkley Point C have been controversial from the start with the Government guaranteeing what many saw as a sky high price electricity generated at the site.

The Department of Energy and Climate Change shrugged off HSBC’s report and the criticism seems unlikely to stop the nuclear plan. The Secretary of State for Energy, Amber Rudd, said on Friday that Britain could sign a deal as early as October during a visit by China’s President Xi Jinping.

EDF announced on the same day that it had chosen preferred suppliers for £1.3billion worth of work linked to the new plant.

But with the chorus of disapproval growing louder the Government and nuclear industry are set to be under huge pressure throughout the project to prove it is value for money for British energy users.

Key to the criticisms levelled by HSBC’s analysts is that the electricity produced by the reactor is likely to be too expensive, as European wholesale prices are expected to fall along with demand for energy from UK users. It warned of ‘huge difference between UK forward prices and the Hinkley price’.

Among HSBC’s eight key concerns is that the reactor will be economically unviable due in part to a rising number of electricity grid links with the Continent providing a ready source of cheaper supply.

At the same time it said projections by National Grid to 2025 all point to flat or declining demand. HSBC said its demand estimates are for a fall of one per cent a year.

HSBC also highlighted the ‘bleak’ future of large nuclear reactors which have a history of escalating costs and sliding deadlines.

Highly critical: Among HSBC’s eight key concerns is that the reactor will be economically unviable due in part to a rising number of electricity grid links with the Continent providing a ready source of cheaper supply

Both Howell and the HSBC energy analysts said building a string of smaller reactors may be preferable economically.

EDF has been guaranteed twice the current market price of electricity over a 35-year period paid for through consumer energy bills. In addition, the Treasury has offered a credit guarantee to underwrite up to £10billion of debt.

Campaigners said the financial support appears at odds with comments from Rudd who on Friday defended plans to withdraw subsidies from green, renewable energy sources such as solar and wind power.

She said: ‘I feel we can deliver on low-carbon electricity through less subsidy.’ Independent environmental policy adviser Dr David Lowry said: ‘It’s bizarre. Ideologically you can understand why they would want to withdraw subsidy from solar and wind power so that they can live or die in the market place.

‘So the Government is in favour of a free market for energy except, for reasons I can’t identify, when it comes to nuclear power where it is in favour of massive subsidies.’

The Austrian and Luxembourg governments launched a legal complaint last month, followed by a challenge from ten German and Austrian green energy firms.

The complainants say the UK Government’s subsidies may reach £76 billion and are in breach of European rules relating to state aid. Some observers say the dispute could lead to delays of six years.

The Department of Energy and Climate Change said HSBC did not take into account the role of the reactor in reducing carbon emissions, nor the contribution that the project would make to UK jobs.