The nuclear option

It has been an interesting week in Brighton. After Jeremy Corbyn’s hugely eventful and - some might say - disastrous first few days in charge of the Labour Party, the faithful seem to have been engaged in Operation Reassure this week at the seaside. Senior party representatives seemed determined not to get engaged in too many policy specifics which might frighten the horses, and even tabloid bête noire John McDonnell did his best to sound considered, bringing in respected former Homes and Communities Agency boss Sir Bob Kerslake to review the operations of the Treasury.

As previously said in these pages, Corbyn’s progress is likely to be of limited interest to many in the industry at this stage, given that we are five years away from an election, at which few political commentators suspect he has a chance of being the next prime minister.

However, the ideas coming from the new old Labour Party will form the backdrop of public debate over the coming months and have the potential to inject some new thinking into the sterile and familiar debates seen in the run-up to this year’s poll.

One area where new thinking seems sorely needed is new build nuclear power. While many in the industry may understandably question Corbyn and McDonnell’s statist outlook, fearing it will be anti-business, the current approach to building the next generation of nuclear power stations, as we explore this week, is in danger of erring the other way toward a market fundamentalism that could, in this sector, be equally damaging.

Building, alongside much of the industry, has supported the last three governments’ aspirations for a fleet of new nuclear power stations. However, the number of opponents saying the time has come to scrap the £24.5bn Hinkley C plan is now formidable.

The project is now opposed widely by many of the same people who have embraced nuclear as the only viable low-carbon option to replace fossil fuels in the medium term, from environmental commentator George Monbiot to former civil service head Lord Turnbull.

The ideas coming from the new old Labour Party will form the backdrop of public debate

Their list of objections is long - from the scale of the planned construction, doubts over the deliverability of the technology, and concerns that slow global growth and greater energy efficiency will mean electricity prices will not rise as previously predicted. But above all, the difficulty is in the dogmatic insistence of getting the project funded “privately”. The word is put in quotation marks because getting a power station paid for by organisations which are mostly owned, respectively, by the French and Chinese governments, may not be everyone’s idea of raising capital on the private market. (shadow energy secretary Lisa Nandy was quick to point to the irony of the government’s position in her conference speech on Tuesday.)

The idea of funding Hinkley C in this way came from the last Labour government. Since then, successive administrations have gone through contortions to attempt to rig a market sufficiently that investors will dare front up the money. The latest being George Osborne’s kow-towing to the Chinese government to offer UK underwriting of its investment. But this is despite the fact the UK, with its historically low interest rates, could raise the money far more cheaply than private enterprise. The response from EDF, which is leading the development, to all of this UK accommodation has simply been to delay and delay a project that was originally supposed to be generating power by 2017, and now won’t turn on until 2024 at the earliest.

The rumours are that EDF will finally give the go-ahead next month - which would be hugely welcome. But even if it does, the fact remains that this is a project which should have gone ahead some years ago.

Given all this, the Labour Party’s talk of taking a more interventionist approach to funding infrastructure holds out the promise of more flexibility over projects whose scale means the private sector simply isn’t best placed to act as developer. And this isn’t wacky far left economics - former Olympic Delivery Authority chair Sir John Armitt called for exactly this approach two years ago.

The final irony is that Labour under Corbyn would be unlikely to invest in this project, because of his stated objection to nuclear power. But it can only be hoped that, through raising these different ideas, the pressure grows on the government to look at different options should EDF continue to prevaricate.

Joey Gardiner, deputy editor