The new nuclear plant at Hinkley Point, which has finally been approved by EDF’s board, will be the most expensive power station anywhere in the world. Beset by delays (first proposed in 2006, it was meant to come online in 2017), it won’t be operational until 2025 and EDF will still receive its enormous £30bn subsidy even if Hinkley generates nothing until 2029.
Some were hoping the new government would junk the project and instead shore up UK energy security by incentivising a constellation of lower-cost, smaller schemes. But despite the unexpected delay in approving the scheme, the signs are that the energy secretary will persist with George Osborne’s nuclear folly, locking consumers into massively higher prices for decades.
Hinkley highlights a significant problem with Theresa May’s renewed focus on industrial strategy, essentially a greater role for the state in guiding the economy. Politicians will pursue schemes beyond the limits of reason, first, because they’re betting with other people’s money, but also because of a lack of imagination about the alternatives and a hope that the prestige of such grand projects will somehow rub off on them.
Osborne went to extraordinary lengths to make Hinkley viable after all but one bidder dropped out, for instance, even striking a deal with China to take a stake despite being warned about security risks.
HS2 is another example. A further damning report is released today into likely cost overruns.
The TaxPayers’ Alliance estimates the high-speed line will set taxpayers back a mind-blowing £88bn once funding for regeneration around stations is taken into account. Even at half that price, HS2 would cost £78.5m per kilometre, double the figure for similar projects in countries like Germany.
As with Hinkley, HS2 is justified as essential infrastructure that Britain needs to stay ahead.
Also like Hinkley, little attention appears to have been paid to whether other projects might deliver greater benefits for similar cost, or whether the technology itself will remain cutting-edge when it is finally operational. Driverless trucks will be trialled on UK roads later this year and the popular adoption of driverless cars is expected to follow within 10 years. Are government assumptions about rising demand for rail really so robust in the wake of such a groundbreaking shift in how we travel?
Britain needs infrastructure – but prioritising the politically sexy over the economically rational is just a waste of money.