Poor old Ed Miliband. I can’t help but worry about his psychological wellbeing, having to deal every day with Keir Starmer (“Get Britain Growing Again”) and Rachel Reeves, who’s turning out to be an even more tin-eared and insensitive Chancellor than George Osborne.
Of all Starmer’s ministers, Ed Miliband knows that Labour’s “growth, growth, growth” slogan is obviously a totally crass answer to the “what do we want?” question. But everyone’s got to do their bit, including Department for Energy, Security and Net Zero (DESNEZ) with an additional demand that as much as possible of this growth must be delivered before the next election. And that’s a big problem for DESNZ.
But let’s start with some good stuff to encourage Ed – as in DESNZ sometimes getting it right. Miatta Fahnbulleh, Ed’s Minister for Energy Consumers, recently confirmed an additional £1.8 billion for the Government’s Warm Homes Plan, focused on low-income households and social housing tenants, retrofitting some of the shittiest housing in England – improving possibly as many as 170,000 properties. New jobs; warmer homes for some of those worst affected by fuel poverty; lower bills; and confirmation (for Rachel Reeves) that DESNZ can indeed drive short-term growth RIGHT NOW, in a fair and cost-effective way. Go Miatta!
We just have to hope that this £1.8 billion isn’t going to be instantly clawed back in Rachel Reeves’s Spring Statement on the 26th of March. By all accounts, that is perfectly possible, with many of the Department’s Net Zero plans apparently in the Chancellor’s crosshairs.
Ed will have a lot to answer for, personally, if that happens. He’s still a total sucker for the propaganda of both the fossil fuel industry (with the latest research from Fossil Free Parliament reminding us that DESNZ Ministers notched up an unbelievable 104 ministerial meetings with various fossil fuel companies between July and September last year) as well as the nuclear industry.
I’ll return to Ed’s mystifying obsession with the fossil fuel industry’s mega-scam of Carbon Capture and Storage in my next blog. For now, let’s just stick to his nuclear nonsense.
Knowing that he will have to give something big and bold back to the Treasury if he’s going to be able to protect things that really matter in his overall portfolio, the blindingly obvious thing to give up is Sizewell C. He knows the Treasury already despises the nuclear industry, deep down, after literally decades of its over-claiming and under-performing. So give them some red meat. A lot of red meat.
The UK Government has already spent around £3.7 billion on preparing the groundworks for Sizewell C. I saw the consequences of that for myself when I was in the area a couple of weeks ago, and I was genuinely shocked. The devastation is unbelievable – including more than 21,000 trees cut down. And that’s BEFORE a Final Investment Decision (FID) has actually been secured. Prospective investors (even in the Middle East) seem to be a lot less keen on Sizewell C than Ministers keep telling us.
Worse yet, Labour has promised another £2.7 billion in the next financial year – to go on doing exactly the same, again, before an FID is secured. Axing Sizewell C at this point, however painful that might be politically, would be a huge, short-term win for the Treasury.
In fact, this would be a much, much bigger prize for UK taxpayers in the longer term. Sizewell C has been described by EDF as a “Hinkley Point look-alike, with a lot of lessons learned”. There’s mighty little evidence that the UK nuclear industry has ever learned a single lesson from its unparalleled record of failure, but let’s just live with that for the time being.
The latest estimate for the “overnight cost” of Hinkley Point C in Somerset is £46 billion. Please don’t be fooled by that ever-so-opaque terminology: “overnight” simply means the cost of construction. It’s the figure the industry loves to trot out to the UK’s limitlessly gullible media (including the BBC and The Guardian), without acknowledging that it doesn’t include the cost of the capital EDF has had to raise to build this monstrous white elephant in the first place. EDF has indicated in the past that cost of capital can add as much as 60% to the overnight cost.
Yes, that’s right: Hinkley Point C will cost at least £75 billion.
It’s highly unlikely that Sizewell C, on the Suffolk coast, will be any cheaper – indeed, it’s already clear that the engineering challenge at Sizewell C is much greater than at Hinkley Point C.
And who will pay for Sizewell C? Well, it’s either YOU as a taxpayer (depending on the size of the stake that the UK government will eventually have to take in Sizewell C in order to secure that ever-elusive Final Investment Decision), or YOU as an energy consumer, through the chosen mechanism of a Regulated Asset Base. From the moment construction at Sizewell C starts, consumers’ bills will start rising.
Axing Sizewell C will obviously be a huge hit to the nuclear industry. Which means it’s probably too much to kill off the industry’s accompanying fantasies about Small Modular Reactors at the same time. At the moment, subsidising SMRs is relatively small beer for the taxpayer, and it’s got as much to do with keeping Rolls Royce on board as it has with any serious attempt to crack the huge technological challenges associated with these new reactors.
Once free of Sizewell C, DESNZ could then double down on all those parts of its portfolio which will deliver real economic value before the next election: solar and wind, storage (batteries plus a lot more), reconfigured grids, and low-carbon manufacturing.
In other words, doing what it says on the departmental tin: improved energy security (through reduced exposure to volatile gas prices); real progress towards Net Zero; and increased affordability for energy consumers through a dramatically expanded Warm Homes Plan, as was promised in Labour’s election manifesto.
All of which means that Ed could sleep so much more easily in his bed.
