Ministers would be wise to play for time before ordering Sizewell C
This is the government’s problem as it reopens talks on a proposed nuclear power station at Sizewell C in Suffolk: it is contemplating ordering a replica of Hinkley Point C before the Somerset original has produced a single megawatt of electricity.
That is not a small point. Developer EDF’s pre-Hinkley version of its European pressurised reactor at Flamanville in Normandy is about a decade behind schedule. What’s more, EDF wants UK taxpayers or bill payers to bear more of the construction risks at Sizewell, a less-than-compelling offer when you remember that Flamanville is also €9bn (£8.2bn) over budget.
Progress with construction at Hinkley is said to be smoother, even if costs have gone up, but one would prefer to see the thing humming before committing another £20bn. Actual production of electricity won’t happen at Hinkley until 2025 at the earliest and, arguably, the government needs to get a move on with meeting its low-carbon ambitions well before then – or so, the nuclear lobby will inevitably say.
Ministers, though, should resist the temptation to make a quick decision. Remember the advice of the Infrastructure Commission in its last assessment of energy needs: a renewablesbased system is the best bet and only one new big nuclear plant needs to be commissioned before 2025.
That would seem to create space to string out the negotiations with EDF; however hard the French state-backed firm may press for speed. A slow pace would also allow Rolls-Royce to work on its plans for small modular reactors. If these smaller-scale units can turned into a financially competitive alternative to mega-plants of the Hinkley/Sizewell variety, the nuclear outlook would change radically.
The Sizewell proposal comes with other problems, including local opposition, the suitability of the site and the still-unclear status of co-financing by China (surely impossible in the current political climate). In short, Sizewell should be viewed only as a last resort.
AstraZeneca boss’s record sug
gests Alexion takeover will pay off
The market has spoken on AstraZeneca’s plan to pay $39bn (£29bn) to buy the US biotech group Alexion Pharmaceuticals and, well, it’s not clear what it thinks.
A 5.7% fall in AstraZeneca’s share price obviously doesn’t signal wild enthusiasm. But nor can one say it implies a definitive thumbs-down: in a deal of this size, and with two-thirds of the purchase price being paid in shares, an initial wobble is not unusual. There is work for the chief executive, Pascal Soriot, to do to convince his shareholders, one might say.
The problem doesn’t seem to be the financial aspects of the deal, where Soriot could point to Alexion’s cashgenerative qualities and the likelihood of a short-term boost to AstraZeneca’s earnings, despite offering a 45% takeover premium.
Rather, the challenge is explaining the strategic thinking. Alexion is big in rare diseases, which AstraZeneca’s isn’t. On that score, though, Soriot can do little more than ask investors to accept his assessment that Alexion’s pipeline of new molecules is promising and that access to new technology could be useful within AstraZeneca’s existing immunology portfolio.
That’s a “trust me” argument, which is not ideal. But AstraZeneca has been transformed on Soriot’s watch by backing the right science at the right moment, sometimes striking out in new directions. The long-term perspective on the share price is a trebling since 2012. That’s a very decent record: one suspects investors will come round in the end.
BDO at least did its U-turn on furlough money quickly
The 260 partners of BDO seem to have grasped that, if you’re going to perform an embarrassing U-turn, do so quickly.
Last Thursday, they said they’d weighed the “moral debate” and thought it fine to keep £4m-worth of furlough receipts from the government – yes, even as they paid themselves an average of £518,000 per head, a grand total of £137m. At the weekend, they capitulated, “recognising the public mood”, and said they’ll send a cheque to HM Revenue & Customs pronto.
At a push, one might say it is easier for the directors of Tesco et al to return money to the Treasury, since they’re handling shareholders’ money, rather than their own. But let’s not make excuses for BDO’s original stupidity.
The government, when dishing out contracts for public sector work, is supposed to be trying to encourage second-tier firms such as BDO. Highprofile own goals just give ministers an excuse to play safe and prefer the big four monopolists.