Is Theresa May Re-Nationalising Britain’s Energy Industry?
Stake in nuclear plant would be dramatic change of policy for UK
Last Monday, the board of Hitachi met in Tokyo to consider the future of their proposed new nuclear power plant at Wylfa in north Wales. The Japanese company decided neither to approve nor to drop the plan but to continue the negotiations with the UK government.
As Toshiaki Higashihara, Hitachi’s chief executive, said after the meeting: “No decision has been taken.”
They were right to pause because the deal on the table was weak and inadequate as protection against the risks involved in a project of such scale. Wylfa is set to cost at least £20bn — and, given the record of new nuclear construction, that figure can only rise.
As reported by the Japanese press, at that stage the deal appeared to involve simply a UK government “guarantee” to cover the construction phase of the project, which is when the risks are highest.
But, within days, authoritative reports in the FT and elsewhere indicated that Britain had gone further and decided to make a direct investment of public money into the project.
This would be a dramatic change of policy with many implications.
First, it would mark the reversal of 40 years of a privatisation of the energy sector begun by Margaret Thatcher and Nigel Lawson. Suddenly, the state is back in business and the arguments against other proposed nationalisations, for instance of the railways or energy retailers, are undermined.
Second, taking a direct stake in one energy supplier opens up issues of competition policy. Will the government take shareholdings in other new nuclear projects including Hinkley Point C ? If nuclear, why not offshore wind or gas-fired power stations?
Then there is the question of the use of resources. There appears to be almost no extra money for anything from the National Health Service to defence and security. But suddenly several billion pounds have been found for a single nuclear power station.