Yesterday the Government committed our nation to an agreement with the Chinese Government and some of their Industries, along with a Company largely owned by the French Government to generate electricity at a price that will heap debt onto the shoulders of our children through their future electricity bills. This is particularly disturbing in the light of previous statements by George Osborne and David Cameron, examples of which are listed below. Meanwhile the BBC reports on yesterdays signing:
EDF Energy has reached an agreement with China General Nuclear Power Corporation (CGN) for a nuclear power plant at Hinkley Point, Somerset. The mainly state-owned EDF said the final cost would be £18bn. State-owned CGN will pay £6bn for one third of it. The agreement also set up a wider UK partnership to develop new nuclear power stations at Sizewell and Bradwell. While they have reached Strategic Investment Agreements for all three plants, only Hinkley has a target date – it is supposed to start generating in 2025. The Hinkley Point project has come under fire over its cost and the delays to investment decisions and the timetable for building. The government has also been criticised for guaranteeing a price of £92.50 per megawatt hour of electricity – more than twice the current cost – for the electricity Hinkley produces.
In terms of the statements by Osborne and Cameron, the following is an article from the Sunday Telegraph 6 years ago on 15th November 2009:
PFI is a way for the state to commission major infrastructure projects without paying the bill immediately. Private firms meet the upfront costs of constructing and running new facilities then receive annual fees from the Government over a long period, typically 25 years. The policy began under the last Tory government but has dramatically expanded under Labour. Critics say it ends up costing taxpayers more. It also keeps the cost of such projects off the Government’s main balance sheet. Mr Osborne said the Tories are now drawing up alternative models that are more transparent and deliver better value for taxpayers. “The first step is transparent accounting, to remove the perverse incentives that result in PFI simply being used to keep liabilities off the balance sheet,” he said. “Labour’s PFI model is flawed and must be replaced. We need a new system that doesn’t pretend that risks have been transferred to the private sector when they can’t be, and which genuinely transfers risks when they can be.”
And more recently in a piece by Sky News from 29th April this year reporting on a debate between David Cameron and Ed Miliband
The Conservative leader said a Labour government was too big a risk for the country and would just heap more debt on the shoulders of “our children”.
It seems that the problem that Cameron and Osborne have with previous PFI initiatives is that that are simply not ambitious enough. The cost of a Hospital or School pales into insignificance when compared to the price of a handful of Power Stations. My suggestion is that we call these schemes State and Private Finance Initiatives or SPFI. If this Government is committed to putting historic PFI schemes into the shade with our new SPFI Power Stations perhaps they could do as George Osborne has suggested and show transparency by admitting that they have done a major U turn. However the issue of cost may not be the most challenging as the BBC article reports:
Opponents have also raised security concerns about allowing China a central role in Britain’s nuclear future. But Lord Sassoon, chair of the China Britain Business Council, told the BBC’s Today Programme he could not see what the problem was. “Why would they want to turn off a nuclear power station in which they had some ownership? “It doesn’t seem terribly logical to me, except in extreme circumstances in which that would be the least of the UK’s problems.”
It seems as though Lord Sassoon and his advisors have forgotten how Russia cut off oil supplies to Countries that it fell out with. Imagine how difficult it would be for a future UK Government to take China to task if they had the capacity to switch off our lights! We may not have anything to fear from a Chinese Government of 2025, but how can we hope to ‘engage with them’ on our terms as Philip Hammond suggest he believes we should, if they are the only hand on the switch for the power needed by our industries and public services, let alone our own homes?