Hinkley Point is a terrible deal. May must show courage and cancel it
They haven’t gone away. The great spending dinosaurs of the political dark ages, back before June 2017, are still roaming the jungle. Theresa May’s first decision as prime minister, to approve the £18bn Hinkley Point nuclear power station, is still crashing about Whitehall. Now the national audit office (NAO) has added its voice to those calling it a really bad deal. The project now has no independent supporters.
Hinkley was a hangover from when Whitehall’s energy department took leave of its senses and approved anything that looked remotely “green”. It just passed the bill to the Treasury. The Treasury then passed the risk to Chinese investors and French contractors. The risk proved so great that these backers swiftly passed it back to the Treasury and future British taxpayers and energy users, in loan guarantees and sky-high prices.
As the French contractors saw their costs soar and risks rise, the burden of these guarantees soared. The Chinese and French have made British consumers the equivalent of a gargantuan pay-day loan. The case for the project, says the NAO, was “marginal” and the deal “not value for money”. That is auditor-speak for crazy. In which case, why does the NAO only speak up now?
Hinkley Point is one of a group of French mega-reactors that have yet to work anywhere and have become a byword for cost overruns and delays. Like most such ventures, they are so big as to get enmeshed in ministerial machismo, foreign diplomacy, lobbying and politics. That is how really bad decisions get made. No one sees the wood for the trees, and the dinosaur crashes on.
May should have cancelled Hinkley on day one. There are already cheaper and less risky nuclear alternatives on the horizon. She lacked the nerve. Now her ramshackle coalition needs to take tough decisions on spending if it is to honour its promise to ease austerity. It must help the police, prisons, housing, schools and mental health services, among others. May has at least shown flexibility in her Queen’s speech this week.
Nothing would signal more clearly a change of heart than for her to clear the ground of the vanities and extravagances of the David Cameron years. The government should postpone its fantastically expensive high-speed rail project, and redirect the money to northern intercity links. It should call a halt to an ever more inflated Heathrow. There should be an embargo on London Crossrails, super-sewers and garden bridges. And May should wriggle out of Hinkley. Whatever the cancellation costs, it will be cheaper in the long run.