Monday, 21 October 2013

Power at any cost

It was announced today that a new nuclear energy plant is to be built in Britain, a development described by the government as ‘historic’. Well, it is historic but perhaps not in ways that give any great cause for celebration. It is the first time that a nuclear power station has been built in Britain not by the government but by private investors, principally state-owned companies in China and France. It is an extraordinary irony that the privatization of British electricity generation – on the basis of the supposed virtues of the private sector – has ended up with paying overseas public companies to do what used to be done by the British state. It is nevertheless underwritten by the British state: there is no risk for the investors both in the specific sense that they are guaranteed a future revenue stream set at twice the level of present prices and in the more diffuse sense that, ultimately, the state will be responsible for ensuring power supplies come what may.

The deal resembles the PFI deals extensively used for public investment in Britain and elsewhere over recent decades. In these, present private investment is paid for by guaranteed long-term future expensive payments from the public purse. Notionally risk is transferred from the state but that is indeed notional since, when public services are at stake, the risk ends up back with the government, as happened for example with the London Underground. PFI has been widely criticised for its poor value.

It is difficult to overstate the folly of these kinds of deals, and not just financially. Thinking about energy in particular (but also transport, healthcare etc.) the idea that key, strategic, services can so casually be handed over by governments is breath taking. With PFI it could be understood as an infatuation with the private sector in line with neo-liberal ideology. But in the case of the new power station there is not even that explanation. Instead, it actually shows the bankruptcy – literally – of that ideology, because it shows that the shrivelled neo-liberal state has no option other than to bribe the state-owned companies of other countries to do what it no longer has the skills or the capital to do itself – whatever the cost.

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