The green dream shatters
The failure of Britishvolt, with its vaunting ambition to create a £3.8bn gigafactory in the North east, offers a salutary lesson. UK dreams of becoming a green energy champion are built on fragile foundations. It is not just Britain’s ambitions to build power packs for the motor industry that are under threat.
Liam Condon, chief executive of Johnson Matthey, warns that Britain is also in danger of losing its leading position in the race to develop hydrogen.
Indeed, the best hope Britain has in hydrogen is the drive by big oil, notably BP, to pioneer in this area. Unlike Britishvolt, the oil major doesn’t have to scramble around in the weeds for backing.
All of this places Labour’s big idea for a Great British energy Company, the centrepiece of Keir Starmer’s speech at his party’s conference in September, in perspective.
Labour is right to bemoan the fact that so many energy firms have fallen into overseas hands. It means vital decisions about our power are taken in Paris, Berlin and Madrid.
International investors normally make hard-headed decisions on where to invest on the basis of rates of return.
But energy is so political, especially given the war in Ukraine, that national interest overcomes all else.
Britain’s only new nuclear project at hinkley in Somerset could not be funded in the UK and is entirely dependent on the engineering and financial support from now fully state-owned eDF. The French firm will also be critical if a facility at Sizewell C in Suffolk is to go ahead.
The idea that the Great British energy Company is going to transform Britain by investing in renewables is fantastical thinking. Picking green winners can be possible.
The Green Investment Bank, set up by the coalition government, had several projects but was an easy target for privatisation when the Government was looking for sources of funding. Labour’s company will be backed by £8bn of state funding. Where that will come from is not clear since windfall taxes, even if they had much bigger yields, have already been spent several times over.
There are questions as to who will run the Great British energy Company and whether it will be able to attract resources in a Labour government with its focus on the NhS, schools and welfare.
Governments of the Left, even when gifted wonderful natural energy resources, don’t have a great record in running energy, as the Venezuela experience shows.
Starmer should switch on to the real world experiences of Britishvolt and hydrogen before peddling dreams.
Battle royal
The fast-revolving door at the Department for Business, energy and Industrial Strategy (BeIS) makes it impossible to discern any consistency in what it does.
Those who hoped that the National Security and Investment Act would finally mean the UK’s tendency to sell its crown jewels might finally be halted will be disappointed.
The latest deal to be waived through is Czech billionaire Daniel Kretinsky’s plan to raise his stake in Royal Mail to 25pc.
One suspects Kretinsky’s interest is in the fast-growth parcel delivery offshoot Global
Logistics Services (GLS) rather than lastmile deliveries, the disruptive CWU union or Royal Mail’s bizarre plan to effectively date stamp the post.
Whether there is any possibility of doing the splits, and Royal Mail being viable commercially as a standalone, is debateable.
What we do know is that the Government doesn’t seem to mind if our vital communications companies, BT and Royal Mail, end up under the thumb of overseas billionaires who cannot possibly have much interest in customer service or building out broadband for hard-to-reach neighbourhoods.
Britain may need inward investment to help address a capital account deficit on the balance of payments. Selling vital and historic public assets is not the answer.
Wrong platform
AND while on the subject of infrastructure, Michael Gove’s suggestion that maybe it is time to revisit hS2 should not be countenanced.
The project may be running over its £40.3bn budget, but axing game-changing transport connecting London to Birmingham and Manchester should not be an option. Infrastructure, from the elizabeth Line to hinkley and the Thames Tideway, offers a key to driving productivity and creating a positive legacy for the next generation.