Let’s Ditch Hinckley Point And Get More Bang For Our Buck

After years of negotiations, posturing and pencil-sucking, plus a final review by our new Prime Minister, the construction of a new nuclear power plant at Hinckley Point was approved last week. I think that was wrong.

My reasons have little to do with the major role overseas interests will play in developing the UK’s first new nuclear station in over two decades. French atomic giant EDF is to build the £18bn Somerset plant, ending-up as the two-thirds majority shareholder. And the Chinese government will provide another third of the cash. I have no particular problem with that.

I’m not too concerned either by the 300,000-strong petition delivered to Number Ten by Greenpeace, calling for Hinckley to be scrapped, while dissing atomic energy more generally. It seems to me that nuclear, on the contrary, is vital to the UK’s energy security.

Providing constant “baseload” electricity in a way renewables don’t, UK atomic stations meet around a fifth of our energy needs – and will remain important, not least as hydrocarbons deplete. Having been a pioneer in the civilian use of nuclear, though, the UK’s plants are on their last legs, and all due to close by 2030.

The problem with Hinckley is that it’s a ghastly deal for taxpayers. Ministers and officials have guaranteed EDF a “strike price” of £92.50 per megawatt hour of electricity generated, from 2025 when the plant is due to open until 2060. That’s over twice the current wholesale market rate of just below £39.

Locking us into such costly energy for 35 years is madness. How can anyone know the electricity price three years hence, let alone three decades? Since this astonishing deal was struck in 2013, technology related to power storage and “smart grid” localised generation has leapt forward. Energy efficiency has also improved, with further gains to come.

Having put downward pressure on prices over the last three years, such advances will certainly reap future savings as well. Yet UK taxpayers will be on the hook to pay £92.50 per megawatt hour – an eye-watering amount which, in addition, is index-linked to inflation.

To make matters worse, the proposed Hinckley Point reactor technology is dubious. New plants where EDF has used it before, in Finland and France, remain unopened, years behind schedule and subject to massive additional costs. No one is saying that the UK’s energy conundrum is easy, but Hinckley isn’t the answer.

While the newly-secured “safeguards” regarding China’s role are important, Theresa should have used her last-minute review to insist instead on a significant downward revision to the strike price. This Hinckley deal really does seem to be terrible value for money. And you don’t need to be a Greenpeace campaigner to wonder how many civil servants and advisors involved in pushing it through will end up with lucrative cushy jobs in the nuclear industry.

Having approved Hinckley Point, I hope our Prime Minister will redeem herself by rejecting HS2. In early August, just days after taking office, she said she was “fully committed” to the high-speed north-south rail link, which represents “a lifetime opportunity to rebalance our country’s economy”. I don’t buy that for one moment.

Since the 1994 privatization of British Rail, UK train passenger numbers have doubled, with freight rail also sharply up. As our road system struggles, an expanded rail network is vital. But HS2 – which proposes to shave half an hour from the London to Birmingham route, at an officially estimated cost of £42bn, up from the £33bn mooted just three years ago – is the wrong solution to the wrong problem.

“Bullet trains” get ministers and well-connected engineers excited. Britain, though, is a small island with a few relatively large cities. What we need isn’t a bit more inter-city speed, but a solution to the now chronic overcrowding on local commuter lines – not only into London, but also Birmingham, Leeds, Manchester and Bristol, where passenger numbers have grown faster than those into and out of the capital. Of course, governments want showcase projects and ministers want “legacies”. But what really matters now is sustained investment into the unglamorous local services that get the vast majority of train commuters across the UK to work.

The construction of HS2 is due to start next year, with the London-Birmingham link completed by 2026 and connections to Manchester and Leeds coming in 2032. Costs will obviously spiral far beyond official projections – for a long time, the Treasury has been unofficially whispering “£80bn-plus”. The Channel Tunnel link overran by 40pc, the West Coast Main Line by almost 80pc.

The official cost-benefit analysis of HS2 is a fiasco. In 2013, the National Audit Office concluded that Department of Transport officials were using “fragile numbers, out-of-date data and assumptions that do not reflect real life”. The Treasury select committee subsequently spoke of “serious shortcomings” in official economic assessments.

A faster London-to-Birmingham train, far from “rebalancing the country” is more likely to draw additional workers to London – with people increasingly commuting daily to the capital from the Midlands. And the benefits of shorter train journeys are anyway becoming less clear, with wifi and smart-phone technology increasingly allowing people work while they travel.

Former Transport Secretary Alistair Darling and Former Deputy Prime Minister John Prescott, having previously been staunch backers of HS2, are both now against the project. The Institute of Directors, having long called for better communications infrastructure, dubs it a “grand folly”. In numerous off-the-record conversations with rail experts, I’ve heard the same, tortured story – everyone knows high-speed rail isn’t what we need in the UK, but there now so much political capital invested, and so much money to be made by the engineers, surveyors and law firms, that HS2 has an unstoppable momentum.

Urgent clarity is needed over HS2’s future, the influential Commons Public Accounts Committee declared last week, given “significant uncertainty” among local communities as the government, facing escalating cost estimates, deliberates over the precise route. The PAC detailed a litany of reasons why the first phase will be delayed even beyond 2026, amid multi-billion pound cost overruns. And the committee’s report came just days after Simon Kirby, the boss of HS2, quit his job.

May now has an interesting opportunity. Rather than spending £80bn-plus on HS2, she should switch attention and resources to investing in capacity upgrades to the two existing lines already running between the UK’s biggest two cities. Beyond the Midlands, what would really deliver a bang for our infrastructure-investment buck would be world-class and far more frequent inter-city links between our great northern cities, as part of a much bigger emphasis on cross-country train services – as oppose to routes that are always about the fastest way to get to London.

The government has already committed £60m to preparatory work on a new “HS3” line between Manchester and Leeds. There is discussion of a trans-Pennine tunnel between Manchester and Sheffield as well as road improvements to the A66, A69 and the north-west quadrant of the M60.” It is vital this work is now prioritized, putting HS3 before HS2 – and preferably scrapping HS2 altogether.

Channeling serious money into Northern transport infrastructure, helping to create an alternative growth-centre to London in the North-West, while bringing in the North East too, would genuinely “rebalance our economy” – providing infinitely better value than the vanity project which is HS2. It would also rejuvenate the Conservative party in the north and, as May herself once said, make it seem less “nasty”.

http://www.telegraph.co.uk/business/2016/09/17/lets-ditch-hinkley-point-and-hs2-to-get-more-bang-for-our-bucks/

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