China fear sent PM nuclear on Hinkley
Why Mrs May slammed brakes on £18billion power plant deal
THERESA May took the stunning decision to delay the Hinkley Point nuclear power station amid national security concerns about Chinese involvement in the £18billion project, it emerged last night.
The Prime Minister also wants to personally review the deal – thrashed out under ex-Chancellor George Osborne – to ensure that it provides value for money for the taxpayer.
Government insiders say Mr Osborne – sacked by Mrs May from her new Cabinet – had proved himself desperate to butter up the Chinese. They also said it would be ‘irresponsible’ for a new PM not to look at the small- print, which includes paying double the going rate per unit of energy.
Mrs May also has concerns that future plans for major infrastructure projects in the UK had become too reliant on Chinese investment under Mr Osborne.
The decision to review Hinkley – announced barely an hour after the board of energy giant EDF had narrowly approved the investment – left the French-owned company reeling.
EDF and the energy industry had ‘100 per cent’ expected London to sign-off the deal yesterday.
Mrs May had hinted to French President Francois Hollande last week that she could delay taking a final decision until September – but EDF was kept in the dark, despite the French government holding an 85 per cent stake in the firm.
Yesterday, EDF had to cancel a planned party for 150 VIPs in a marquee on the Somerset coast – sending home two Chinese dignitaries who were due to attend.
Mrs May is said to have specifically raised concerns with Mr Hollande about Chinese involvement in the deal. The Chinese nuclear industry, run by Beijing, had agreed to take a 33.5 per cent stake.
MPs pointed to national security concerns raised by Nick Timothy, Mrs May’s chief of staff, in the months before they entered No 10 as one major explanation for the delay.
In an article highly critical of Mr Osborne for cosying up to China, he said ‘rational concerns about national security are being swept to one side because of the desperate desire for Chinese trade and investment’.
Writing on the ConHome website last October, he added: ‘No amount of trade and investment should justify allowing a hostile state easy access to the country’s critical national infrastructure. Of course we should seek to trade with countries right across the world – but not when doing business comes at the expense of Britain’s own national security.’
Joel Kenrick, a former political adviser in the Energy Department, said scepticism about the Chinese involvement in the project was likely to be a key factor in the delay – not least because Mrs May was home secretary for six years. He added: ‘I’d be surprised if the Home Office and its related organisations didn’t have concerns about that.’
Barry Gardiner, Labour’s energy spokesman, said he also believed Mrs May had halted the deal because of Chinese involvement.
He added: ‘Delaying the decision on Hinkley at the eleventh hour shows a disregard for the 25,000 British jobs that depend on it and sends a disastrous message to the investor community that this Government is incapable of managing large scale infrastructure projects ... This is an appalling sig- nal to send and a humiliating diplomatic move.’ Senior Government insiders played down the idea that the project – which is already years overdue – was on the verge of being scrapped. Instead, it will be subject to a thorough review before a final decision in the autumn.
The delay was known to only a handful of the most senior No10 advisers – with even Chancellor Philip Hammond kept out of the loop and the Energy Secretary only finding out at the eleventh hour.
A decision was taken not to go public on the delay until after a knife-edge vote of the EDF board had been taken at around 7pm. Seven of the company’s 18 directors voted against the plan, with another resigning in protest over fears that the cost could cripple EDF.
Originally slated to cost £10billion, the Government claims Hinkley Point will now cost £18billion. But critics say the final price tag could be as much as £29billion. And, while it is now planned to start generating in 2025, this is several years later than originally promised.
There is speculation that – if the Government had made its announcement before the vote was concluded – the deal might have collapsed altogether.
Mrs May began asking forensic questions about the deal as soon as she came to office, according to insiders. During a meeting with Mr Hollande in Paris last Thursday, Mrs May suggested she would review the project and postpone a final decision by several weeks.
She reiterated her position in a phonecall on Wednesday night, according to French sources. Mrs May is said to have directly raised
‘At the expense of national security’
Rational concerns about national security are being swept aside because of the desperate desire for Chinese trade and investment Theresa May’s new chief of staff Nick Timothy, Oct 2015
the question of Chinese companies investing in the deal. EDF, by contrast, was caught completely cold – discovering what had happened only when it read a statement placed on a Government website late on Thursday night.
Jean-Bernard Levy, EDF Group chief executive, said: ‘There is no comment to make. I have no doubt about the support of the British Government led by Mrs May.’ The board of EDF is not expected to review its decision in light of the delay.
Government insiders said Mr Hollande had been ‘understanding’ but was seeking ‘assurances’ the deal would eventually go ahead.
All options are on the table, including trying to negotiate the hugely generous deal. Mr Osborne was so keen to see it go ahead that he agreed to pay £92.50 per megawatt hour produced for 35 years – which was double the going rate.
Alternatively, attempts could be made to ‘decouple’ the deal, which includes separate Chinese invest- ment in new nuclear power stations in Suffolk and Essex.
EDF and the China General Nuclear Power Corporation have agreed a partnership for the development of plants at Sizewell and Bradwell. The Chinese controlling stake in Bradwell – 66.5 per cent – has alarmed some Whitehall officials.
In the statement announcing the delay to Hinkley, Energy Secretary Greg Clark hinted at a rethink on the two extra plants.
CGN was said to be ‘bemused’ by the sudden nature of the government’s announcement and had not been given insight into the reasons, other than it was a decision by the PM. It was also ‘frustrated’ that the UK government had allowed speculation about national security concerns to continue.
Ian Liddell-Grainger, the Tory MP whose constituency includes Hinkley Point, said: ‘Theresa May wants to make sure it’s the right job and that’s what she’s doing.’
FROM a public relations point of view, the Government’s last- minute postponement of a decision on Hinkley Point nuclear power station was an unmitigated disaster.
As pens were poised over contracts, with the Champagne on ice, it gave an impression of hopeless confusion and dithering in Whitehall – while infuriating the French and Chinese, who were led to believe this was a done deal.
Yet appearances aside, doesn’t it make perfect sense for Theresa May’s incoming administration to take a cool look at the project before committing taxpayers and energy consumers to its eye-watering, multi-billion-pound price tag?
One word of warning. For well over 20 years, as old nuclear and coal-fired power stations faced decommissioning, politicians of all parties have disastrously failed to come up with a coherent energy strategy to meet our increasing needs.
So if Mrs May should reject Hinkley Point in the autumn, it is imperative that she produces a realistic Plan B, ready for immediate action.
Meanwhile, she must press ahead with ending uncertainty over other projects such as HS2, the northern powerhouse and runway capacity in the South-East.
For decades, prime ministers have prioritised spin over substance, avoiding hard choices that might damage their image. If Mrs May gets the PR wrong, but the decisions right, this paper will be the first to congratulate her.