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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Open Source Planning

In a comment on an earlier post to this blog, a reader asked where George Orwell is when we need him. I believe I may have found the answer: he has been employed as a Discourse Adjustment Analyst in the Department for Communities and Local Government, where doublethink is thriving. How else could we have a planning document that draws its title from the free software movement and yet is deliberately designed to commodify nature and sell it to the richest developer? His work can also be seen in the title of PPS4, called Planning for Sustainable Economic Growth, published under the Labour administration. It is rumoured that he will shortly be setting us his own consultancy, Oxymoron Inc.

During a training session organised by two members of the Planning Officers Society earlier this week I was told that my definition of Localism was entirely wrong. In spite of any lingering hopes about the Localism Bill, the trainers made it clear that it is hierarchy dressed up as subsidiarity: ‘The localism agenda is there to promote growth’ was the message. The National Planning Policy Framework has a presumption in favour of development where no core strategy exists, as in Stroud, and now that the Regional Spatial Strategies have been swept away this leaves us extremely vulnerable.

Unsurprisingly, the voice of the developer, the British Property Federation, has welcomed the new Framework. The changes are all, apparently, about efficiency and the removal of red tape: 'The planning system has become unwieldy and needs to be pared back'.

While regional planning has been all but swept away, there is a new level altogether: that of the neighbourhood. This is as yet undefined for urban areas, but in rural areas must be defined by parish boundaries. Neighbourhoods will be able to organise themselves to develop their own plans and, so long as they stick to the council's plan, the council must provide them with expertise and fund a referendum on the plan. If the neighbourhood votes in favour the plan must be followed.

This is not quite as exciting as it sounds, since the system is still hierarchical so that the neighbourhood can only make minor changes. For example, if it has been decided by the higher-tier authority that nuclear waste will be desposited in your neighbourhood, you are only at liberty to decide its precise siting. As the recent decision by Eric Pickles to permit the dumping of radioactive waste in a community near Peterborough that had clearly voted against this course indicates that the real motivation is profit and the real power still the national government.
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