No one would ever describe Hinkley Point as free of controversy. But the government’s announcement that it will be delaying the final decision on the project certainly came as a shock.
Less than a fortnight ago, Chancellor Philip Hammond was reaffirming the government’s commitment to the new nuclear power station, which, he assured the British public, would be well worth the £18 billion price tag. Business and Energy Secretary Greg Clark was touting Britain as “open for business”, edging closer to “sealing the deal on this major investment in British infrastructure and British jobs” that was due to supply 7 per cent of the country’s electricity. And now people are speculating that the project may be called off altogether.
New Prime Minister Theresa May could have picked any number of reasons to delay the project. The £92.50 per megawatt hour of electricity promised by the government to France’s EDF in 2013 is now significantly overvalued, given the subsequent drop in wholesale energy prices. The National Audit Office estimates that future top-up payments will rise from £6.1 billion to £29.7 billion over the duration of the 35-year deal. French trade unions fear the enormous cost of the project could cripple EDF. Their unrest has in turn unsettled French politicians, who are already in the shadow of next year’s presidential election. Not to mention the safety concerns which have got campaigners pointing to disasters ranging from Chernobyl to Fukushima.
But it seems the real sticking point for Mrs May is the Chinese. Former Business Secretary Vince Cable has alleged that the prime minister is unhappy with the “gung-ho” approach to Chinese investment promoted by former Chancellor George Osborne and had raised objections to the involvement of state-owned Chinese companies in Hinkley Point for reasons of national security. May has previously hinted at suspicion of Chinese involvement in UK infrastructure, expressing dissatisfaction at the due diligence done before Chinese telecoms firm Huawei’s major partnership with BT in 2005.
It is clear that security is a priority for May. As Home Secretary, she championed the Investigatory Powers Bill, better known as the ‘Snoopers Charter’, oversaw a significant increase in funding for the intelligence agencies and campaigned to remain in the EU on the basis that this would allow Britain to retain access to key security mechanisms. She will undoubtedly be troubled by warnings that the Chinese could manoeuvre themselves into a position where they could potentially shut down Britain’s energy production at will.
May’s stance has, unsurprisingly, ruffled a few feathers. Not least within her own government – Treasury Commercial Secretary Lord O’Neill, who championed the ‘Golden Era’ of UK-Chinese ties alongside George Osborne, is already threatening to resign over the decision to delay.
However, May is not the only one to have concerns about the security implications of Chinese involvement in largescale infrastructure projects. To date, no other western country has allowed Chinese involvement in their nuclear energy provision. The United States has refused to allow the Chinese firm Huawei to run parts of its national telecommunications network, despite the fact that it already does so in the UK. And former Energy Secretary Ed Davey has now come forward to criticise the Treasury’s refusal to adopt extra safeguards that would have given the UK government additional powers to intervene in decision-making regarding the nuclear plant.
But the price of caution could be too great even for Theresa May. China has a track record of freezing diplomatic and trade ties with any country that dares to displease it, and has already warned her that a “suspicious approach” to the project could “stain” Britain’s credibility as an open economy. May’s promise to make a success of Brexit will rely on strengthening trade with countries outside the EU, so can she really afford to anger this rising economic superpower? Officially, she has said she will “continue to seek a strong relationship with China”. She may find it an impossible task if Hinkley Point gets the chop.