Does the Hinkley Deal Involve Subsidy?

There has been some confusion since Ed Davey’s announcement of the details of the plan for building a reactor at Hinkley C in Somerset, and some of this confusion may not be accidental.

First, we have the issue of whether the government is in a position to make this decision. In fact, it is not. Any arrangement that involves explicit or implicit subsidies needs to be investigated under the EU’s state aid rules which are ‘forms of assistance from a public body, or publicly-funded body, given to selected undertakings (any entity which puts goods or services on the given market), which has the potential to distort competition and affect trade between member states of the European Union’ (definition from the BIS website).

During parliamentary questions on 15 May to Michael Fallon, Minister of State for Business and Enterprise, Martin Horwood, MP for Cheltenham, asked the minister ‘how he proposes to comply with the standstill obligation in EU state aid law if he enters into an investment contract or sets a strike price before the European Commission has decided whether to approve such measures’. Fallon replied that ‘Any investment contract, if offered, will contain a condition dependent on a state aid decision from the European Commission’ (Hansard, 15 May 2013).

The minister’s clear view is that the setting of a strike price for energy will require a consideration by the EU Commission in terms of its compliance with competition law, law that relates specifically to the granting of state subsidies that may distort competition. Hence we can infer that the minister himself believed that this arrangement amounted to a public subsidy.

This appears to contradict the statement made on Monday by Ed Davey that ‘For the first time, a nuclear power station in this country will be built without money from the British taxpayer’. This is a carefully phrased statement, since the strike price is an implicit guarantee while the insurance against increasing costs are a risk on the public, which is to say nothing of the responsibility for disposing of the waste the plant generates.

While Davey is nervous about breaking his previous pledge that there would be no subsidies for nuclear, South-West Liberal Democrat MEP Graham Watson is not. As reported back in April he told the somewhat 'Business Green' that he supports subsidies for nuclear power in the South-West. Watson'defended the UK government's right to offer hefty state aid support for new nuclear reactors'.

Specifically in relation to Hinkley C, back in May the minister was asked by Paul Flynn at what stage the negotiations with EDF had reached. The minister replied that ‘in the case of Hinkley Point C, the Government have committed to provide summaries of reports from external advisers and analysis on the value for money of any contract agreed’. These reports were not forthcoming on Monday and I would be interested to see them if anybody knows where to track them down.

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When is A Free Market Not a Free Market?

We have a joke in the South-West Green Party along the lines of the Monty Python sketch about the Romans but ours revolves around the question 'What has the EU ever done for us?' As someone who is critical of Europe, although not a Euro-sceptic, I am glad to be reminded that Europe has constrained the worst excesses of neoliberalism in Britain, and that much of this results from the actions of the powerful Green Group in the European Parliament. Now it looks as thought the EU is the last hope to stop the dangerous decision to build a new nuclear station at Hinkley Point in Somerset.

An article in the Guardian last month suggested that the EU Commission looks set to set up a full-scale inquiry into the massive government subsidies that are needed to encourage EDF to build at Hinkley Point in Somerset following the disastrous planning decision gave the new station the go ahead last month. Ironically, it is the hugely destructive single market regulations that this time might delay or even scupper the project, since that mythical 'level playing-field' must be ensured for all energy generators and, although EDF is not a UK company, if the UK government offers it financial incentives to build at Hinkley Point that could still contravene what is considered to be free competition.

The comment from Doug Parr, policy director for Greenpeace, is most pertinent: 'The government wouldn't need state aid approval for nuclear if it wasn't trying to subsidise a risky technology that could wind up costing more than the renewable alternative'. The misguided policy to give life support to a dying and obsolete industry is also a dangerous diversion from the urgent investments we need to make in the energy generation of the future, the renewable forms of energy generation such as windpower, wavepower and solar that are clean and do not damage the health of current and future generations.

Meanwhile, South-West MEP Graham Watson has told the somewhat ironically titled Business Green that he supports subsidies for nuclear in the South-West. Following the change of direction of the party, led by Energy Secretary Ed Davey, Watson 'defended the UK government's right to offer hefty state aid support for new nuclear reactors'. He argued that the nuclear industry has a fair case for subsidies because fossil fuel suppliers also receive generous government support. To which we can only suggest that two wrongs do not make a right, and when the risks are as high as they are with nuclear any price is too high a price to pay.
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Not with a Bang - Not Yet

The news that the inquiry into the decision about whether to build a new nuclear station at Hinkley Point in Somerset was complete in less than a year slid out into the public domain almost unnoticed. In spite of the horrors of Fukushima - still unresolved - in spite of the decisions by a number of other countries to abandon their nuclear programmes, the UK government is still ploughing ahead with this dangerous and out-dated technology. Local people demonstrated but were barely covered by national media. Where was the lengthy and dramatic public inquiry, akin to the three-year process that preceded the permission for a new station at Sizewell in 1987?

Such things are now vestiges of a lost democracy, swept away in the brave new world of the Infrastructure Planning Commission, now 'seamlessly transferred' into the Planning Inspectorate. Without any apparent irony the government website informs us that: 'The main change introduced by the Localism Act will be that the relevant Secretary of State will be the decision maker on all national infrastructure applications for development consent. The Secretary of State will have three months to make a decision, following a recommendation from the Planning Inspectorate'. The main consequence of Pickles's commitment to localism is that he will now make all controversial decisions in his department in London.

Being somewhat surprised about the speed with which the Hinkley decision was made I enquired of the National Infrastructure Directorate of the Planning Inspectorate about how the members of the Hinkley panel were chosen and what was their relevant experience. I was told that when the IPC was an independent body the Commissioners were public office-holders whose biographies and personal information was available on the IPC's website. When it was subsumed into the Planning Inspectorate they became civil servants and so it was no longer appropriate to publish their personal details.

Chair of the panel Andrew Philipson appears to set the tone for the approach to people's concerns in the face of the planning juggernaut. According to a press release from Stop Hinkley: 'When local resident and single mother Nikki Clarke asked who would look at the dangers of nuclear power to the health of local children if the IPC were not prepared to do so, Sir Andrew's response was to tell her that her point was irrelevant; when she tried to continue he had her microphone switched off and adjourned the meeting, asking her to leave.'

This is what the Ministry of Localism means: the ministry of centralised decision-making in favour of the elites, within a government committed to communication by doublespeak.

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