The Bank edges its economic forecast up! Hinkley goes ahead

Just as I predicted, the Bank of England has to admit it has been too pessimistic. Yesterday the small increase in the Q3 forecast was the bare minimum they had to do, as many of the numbers for Q3 are now in and their forecast was looking silly. Retail sales were up a thumping 6.2% in August 2016 compared to a year earlier, giving the lie to the idea of a sharp post vote recession which the Bank implied in May and got into headlines from their news conference.

Meanwhile the government has reflected and decided to press on with Hinkley nuclear power station. Their renegotiation or pause produced some control over EDF selling the investment on and a statement that other measures will be taken over national security for future investments. There was no change to the very high strike price for the power built into the contracts, and no change to the fact that foreign interests will finance it and will therefore take all the spare cashflows as interest and dividends once the station is producing.

When I asked about this the Minister rightly stated that the £18bn inward investment is a positive balance of payments flow during build. He stressed that all the construction risk – risk of cost and time overruns – rests with the French and Chinese investors. I was making a different point. I want the government to find ways for any future power station investment to get them financed in the UK with UK capital. It should be possible for a power station like Hinkley to find UK investors who would put up bond capital, where they did not take any construction and project risk, but would get decent interest payments and eventual repayment of capital when the plant is running. It might also be the case that some UK investors would want riskier capital investments where they did take some project and construction risk in return for higher possible rewards.

The danger of the Hinkley model is a weak balance of payments position for many years to come once the plant is producing revenues. Overseas investors will expect a decent reward in the form of interest and dividends. It’s but a step away from importing our power through the interconnectors, where the whole cost of the power is negative on the balance of payments. With Hinkley a proportion of the very large revenues it generates will flow abroad. We need to put in place some UK power where the plant is here and the investors are here. When the government can borrow at 1.5% for 50 years we could even consider putting some state cash to work for say 3.0% on a low risk priority capital basis and make a turn on the money, though I prefer private sector investment and think it is available for the right bond instruments.

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132 Comments

  1. Newmania
    Posted September 16, 2016 at 5:31 am | Permalink

    I think we are all clear that there will be a cost to the putting the economy on steroids in order to save it from Brexit. Inflation is surely going to be an issue and when the slow down in investment starts to appear on the supply side ( also the devaluation)
    It is , as I understand it , the Brexit contention that had no-one done anything all would have been well and the same buoyant figures that have helped the country climb out of its misery would have come along anyway
    That , I am afraid , is the Nationalist for you and it reminds me of Salmon`s claims that a drop min the price of oil only went to show how urgently Scotland needed t take control of its own economy (horse laugh)…..Brexit will never be to blame for anything in the eyes of it monomaniacal zealots . Main stream opinion occupies another reality entirely and you must choose whether to listen to experts or blogs
    I don`t see what is a ”alleged “ about the deficit and it is not just the deficit but the National Debt which is a growing problem as we enter the Brexit slow / no growth era . We will not be able to overspend in the way we have without growth shrinking the proportionate problem. That argues a sharp cut in spending . Naturally Brexit don`t want that , addicted to debt as they already are
    My own concern is that as the barriers to trade start to assume a concrete shape after get on the escalator to poverty the markets will react and there will be nothing left to set against the panic.
    I think everyone is still desperately hoping we wil not leave the single market as the reality of the damage done becomes apparent and people understand how their jobs have been used as gambling chips .

    Reply There was no damage from voting out!

    • hefner
      Posted September 16, 2016 at 10:03 pm | Permalink

      “There was no damage from voting out”: Indeed. Will there ever be? Nobody knows for sure. And it is dishonest to pretend one way or the other, specially when one talks without being really able to influence the flow of events. But obviously that’s the blogger’s privilege to be able to write their daily five hundred or so words, even if they do not mean much. (That’s already seventy one of such).

    • Anonymous
      Posted September 16, 2016 at 10:37 pm | Permalink

      Newmania – Then why did the Prime Minister, 2/3rds of the Commons, the Lords, the Queen enable the referendum (all expertly advised) if the ‘wrong’ result could deliver the dire and dangerous consequences you keep howling on about ?

      You’re

    • Richard1
      Posted September 16, 2016 at 10:44 pm | Permalink

      It seems to make sense to me to join the EEA as an interim step, not least to quel the sort of hysteria we see here. I’d have thought all we need to do is keep out the criminals terrorists and welfare scroungers, and then we can accept immigration from the EU as is. We could bung a few £bns to the non euro Eastern European countries in place of of some of our current EU fee – it would be a better use than currently of much of our overseas aid budget – more or less as the Norwegians do. Then no need to worry about tariff barriers, financial passporting etc. And we’d be out of the CFP The CAP etc.

      I do wonder though why those such as Newmania think the only economic salvation can come through ever closer political union with the worlds most sclerotic economic bloc, which is locked into a catastrophic currency union, and an idealogy of uncontrolled immigration, the political effect of which is creating alarming parallels with the 1930s.

    • Denis Cooper
      Posted September 17, 2016 at 7:30 am | Permalink

      I hope and expect you will be contributing to the next thread!

    • APL
      Posted September 17, 2016 at 8:43 am | Permalink

      Newmania: “Inflation is surely going to be an issue ..”

      Inflation has been ‘an issue’ for the whole of the twentieth century, over 9,000% devaluation in the pound sterling since 1913.

      If ‘BREXIT’ provokes a rise in inflation, it’ll be a blip compared to the historical devaluation of the pound over the last century.

      Newmania: ” the slow down in investment starts to appear on the supply side ”

      Is caused by the end of the inflationary policies that Western socialist governments have pursued for the last sixty years. Leaving nearly every banking institution in the West bankrupt, and nearly every sovereign levered up to the hilt.

      Nothing to do with ‘BREXIT’.

      Newmania: “Brexit will never be to blame for anything in the eyes of it monomaniacal zealots”

      Well, BREXIT is not to blame for anything, since BREXIT hasn’t yet happened and we don’t yet know what form BREXIT will take.

      Newmania: ” monomaniacal zealots ”

      Stop projecting.

  2. Lifelogic
    Posted September 16, 2016 at 5:36 am | Permalink

    He needs to cancel HS2 and indeed Hinkley C which is bonkers at near 2.5 times the going rate for electricity that is not even as on demand as gas or coal, thus worth even less.

    He need to go for a neutral, simple, low, tax system. It will raise more tax in the end and produce growth. He needs to aim for the opposite of Osborne’s bonkers agenda in nearly all respects.

    He needs to undo the landlord (thus tenant rents) and pension pot & saving muggings.
    Reduce Stamp duty hugely.
    Reduce income tax currently at up to 45% and CGT at 28% on non real gains
    Restore personal allowance and child benefits for many
    Reduce vat on many items as you say.
    He need to at least keep the IHT £1M each promise made by ratter Osborne.

    Above all he needs to set a direction of travel. 180 degree away from the Osborne Cameron socialist one.

    • Lifelogic
      Posted September 16, 2016 at 5:44 am | Permalink

      Wonderful example of BBC bias yesterday on Question Time.

      The country is perhaps about 60% in favour of more choice in education and more Grammar Schools.

      The QT audience about 2:1 against the, the panel was essentially all against just Quentin Letts fully in favour. So 4:1. The dreadful Soubry a bit on the fence.

      They country was 52:48 in favour of brexit (in fact without project fear from nearly all the parties it is more like 2:1 in favour of Brexit I suspect).

      So they have four remainers on the panel plus the one sensible Quentin Letts.

      The chair usually takes the bonkers BBC line on the greencrap, the EU, magic money tree economics, PC correctness too.

      • DaveM
        Posted September 16, 2016 at 9:40 am | Permalink

        Talking of BBC bias, since you mention percentages, have you noticed that when referring to the Scottish Indyref result the BBC (who got the result they wanted) round the figures to 55% and 45% and refer to the “overwhelming” result, whereas the EU ref result is always specifically referred to as 51.9 and 48.1 rather than 52 and 48?

      • Richard Butler
        Posted September 16, 2016 at 11:40 am | Permalink

        Yes, last night as I watched I loudly condemned the BBC as one after another of the discussion topics found a panel 4:1 in agreement with the liberal consensus. Dimblbey epitomises why the public feel ever more disconnected from the political/media consensus establishment.

        I urge you to watch BBC Dateline London, Saturday lunchtimes, the panel is usually 100% liberal consensus, and again the host (Gavin Essler usually) has the sanctimonious arrogance to be party to this state propaganda. When are we going to stand up against this?

        Ever more people are turning to new sources of news and current affairs.

      • Edward2
        Posted September 16, 2016 at 6:12 pm | Permalink

        That particular Question Time was the worst in its troubled history.
        An unbalanced panel and an unrepresentative audience.
        I thought even Dimblebee looked embarrassed.

    • Lifelogic
      Posted September 16, 2016 at 5:51 am | Permalink

      The other thing he need to do is say clearly that we are scrapping all the absurd grants for “renewables” (expensive unreliables) wind, lagoons, wave etc. now. Even for current projects. We should be going for cheap on demand energy and no longer going to export jobs.

      No that “Sir” Ed Davey has gone we will base energy on engineering and scientific reality rather than politics and the greencrap religion as with Davey.

      Why on earth are the sensible Owen Paterson & Peter Lilley not in May’s government? After all she has endless dopey, remainer, greencrap, lefties in it?

      • turboterrier
        Posted September 16, 2016 at 6:54 am | Permalink

        Lifelogic

        Why on earth are the sensible Owen Paterson & Peter Lilley not in May’s government?

        You forgot: Redwood, TC Davies, Rabb to name but a few more.

        • Lifelogic
          Posted September 16, 2016 at 8:58 am | Permalink

          Indeed it is not as if she has a glut of talent in government after all. Endless second rate art graduates, PPE sorts and lefty lawyers everywhere. May’s geography degree is at least a little more respectable, a little numerate & practical – at least one hopes so.

        • Mitchel
          Posted September 16, 2016 at 10:34 am | Permalink

          And why are discarded politicians from the New Establishment allowed to continue to advance their careers at public expense?I’m thinking of George Osborne with his new “think tank”(Northern Powerhouse Partnership),said to be government backed(and therefore I presume government funded,happy to be contradicted if this is not the case)and Nick Clegg (according to the Daily Mail)having his private office funded by the taxpayer(the first non former PM to be given the privilege).

        • A different Simon
          Posted September 16, 2016 at 5:05 pm | Permalink

          For a moment I thought you meant David Davis .

          I had high hopes for him but he has shown himself to be lightweight .

          There is not much of a talent pool to choose from . Maybe that is the idea ?

          • Richard1
            Posted September 17, 2016 at 10:47 am | Permalink

            I agree, neither David Davis – who always comes over as far too pleased with himself – and Liam Fox seem lightweight to me. I think our host should allow his name to go forward. It would also be good to see Peter Lilley in government again, he is always, also, very sensible and articulate.

            It concerns me somewhat that we are not in the best available hands at this critical time. I hope the lightweights are closely controlled by Mrs May and by other ministers and civil servants.

            Reply An MP is either offered a Ministerial post or not, depending on the wishes of the PM. There is no process to put your name forward.

    • Lifelogic
      Posted September 16, 2016 at 5:52 am | Permalink

      He should also get on with a new runway at both Heathrow and Gatwick.

      • Bob
        Posted September 16, 2016 at 8:12 am | Permalink

        @lifelogic
        UK needs to accept that Heathrow Aerodrome is already over-extended, and to continue developing it would be a wasted opportunity.

        In Hong Kong they faced a similar decision and sensibly decided that it would be a mistake to keep extending the runway at Kai Tak because like Heathrow, the location was originally an airfield for small propeller driven planes not heavy jet liners. They took the bold step of building a new purpose built airport in a location where the planes take off and land over the sea which reduced the noise pollution and traffic congestion in Kowloon. The new rail and road connections to Chek Lap Kok have have had a knock on effect of making Lantau more easily accessible opening up new areas for commercial and residential development.

        A major infrastructure project like Boris Island would be a very useful boost for the UK’s confidence right now and demonstrate to the rest of the world that we mean business.

    • Richard1
      Posted September 16, 2016 at 8:21 am | Permalink

      Although in fairness to them, I see Cameron and Osborne have reduced the number of state employees by over 1m – down to the lowest level since before Labour came to power. If we get to a balanced budget and state / GDP of 36%, we won’t be in as solid a position as eg Singapore Switzerland or Hong Kong, but it’s a hell of an improvement on the results of Blair-Brown.

      • Mitchel
        Posted September 16, 2016 at 8:59 am | Permalink

        We may have reduced the numbers directly employed by the state but how many are indirectly employed through outsourcing to private contractors,charities and other agencies?

        Public spending figures are a better guide than state headcount.

      • Lifelogic
        Posted September 16, 2016 at 9:13 am | Permalink

        Total government spending £670 in 2010 and now £762 billion. So about 13% up in 6 years despite the decrease in numbers. Meanwhile public services have deteriorated hugely, particularly the NHS, roads, social care, GPs, libraries, education, refuse collection … hardly so much as a public loo nowadays. HMRC cannot even be bothered to answer the phone or letters.

        Plus they charge for more and more things that used to be free or were far cheaper.

        I suspect the reduction is due to reclassification of people as now working for subcontractors like G4S, Serco and Sodexo Justice Services (formerly Kalyx) or similar bodies, charities, quangos.

        Congratulations are not due. We pay more and get less & less and still they run a massive deficit. This while Cameron and Osborne lied that they were repaying the debt!

      • libertarian
        Posted September 16, 2016 at 11:40 am | Permalink

        Richard1

        They may have reduced the number of state employees but they did this by outsourcing taxpayer funded jobs to private companies. So intact the state overhead has gone up

        • Richard1
          Posted September 16, 2016 at 5:18 pm | Permalink

          Indeed, although its better to have these services provided by private companies where the contracts can – in theory – be terminated & there can be competing providers, rather than by direct employees whose costs tend to be very intractable. The point I am making is i see the glass 1/2 full. Its a lot better than it would have been had Labour been in power.

        • getahead
          Posted September 16, 2016 at 7:03 pm | Permalink

          in fact?

    • Lifelogic
      Posted September 16, 2016 at 8:33 am | Permalink

      Hammond should also abandon the idiotic planned “quarterly reporting for businesses and landlords”. It it just another pointless burden on the productive sector, distracting them from doing their real productive job, rendering them less competitive and less profitable. Thus even reducing the amount of tax they have to pay and even putting some of doing business at all.

      Once a year is quite enough of a burden already for businesses. What is the point of governments shooting businesses & even themselves in the foot in this way? I assume it had Osborne’s backing as it is so misguided.

      I assume what drives it is that they know some people will be unable to comply due to illness or other demands on their time so they will fine them. In the same way they endless mug motorists for tiny infringements into bus lanes or failing to file SORN documents when the car is off the road or similar.

    • Lifelogic
      Posted September 16, 2016 at 3:36 pm | Permalink

      If the government cannot even get a decision that is as clear at Hinkley C right it is hard to have any confidence in their judgement at all.

  3. stred
    Posted September 16, 2016 at 5:46 am | Permalink
  4. Lifelogic
    Posted September 16, 2016 at 5:55 am | Permalink
  5. Mark B
    Posted September 16, 2016 at 5:56 am | Permalink

    Godd morning.

    Not good news over Hinkley Point. The energy it will produce will be expensive and the only way I see the price being reduced is through alternatve suppliers and competition.

    Wherever you find government, particually big government, inefficiency and corruption is never far behind.

    • APL
      Posted September 17, 2016 at 8:44 am | Permalink

      Mark B: “The energy it will produce will be expensive ”

      We could use the channel interconnect and sell it to the French on a Cost + basis.

  6. stred
    Posted September 16, 2016 at 6:11 am | Permalink

    The Finns cancelled their contract for controls in their Hinkley and gave it to Rolls Royce. Perhaps we should do so too.
    http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/finland.aspx

  7. Jerry
    Posted September 16, 2016 at 6:16 am | Permalink

    Cherry picking only those facts that fit your chosen narrative again, didn’t the BoE also state that they might need to revisit both interest rate cuts and further stimulus?

    As for the August retail sales figures, what do they prove considering that some sectors are down on what would be expected whilst others did unseasonally better, consumers might even be buying big ticket items before any possible post Brexit price increases.

    What you seem to want to do is to judge the quality of the chief by raw produce still growing in the fields…

    As for Hinkley, indeed, but there is one obvious UK investor that is being over looked, as is now usual. Why can’t the state be the investor, and benefactor, after all the tax payer is going to fund this anyway, if not through taxation and the like then hiked energy prices. It makes no difference if the government takes from my left-hand or companies like EDF take from my right-hand, I’m still the poorer except that if the government is the benefactor to the future profits then so am I as the governbment can then further invests in other infrastructure projects or services.

    Reply Yes, the Bank did say they might cut rates further. I think this is absurd – another false forecast. Retail sales and consumer spending have continued on a strong trend for the whole of the last year. Why should leaving the EU alter that?

    • Jerry
      Posted September 16, 2016 at 7:20 am | Permalink

      @JR reply; If your predilections are so much better than those running the BoE why are you a politician, surely you should be the Governor of the BoE, or at least living in No.11 Downing Street! As for consumer spending, perhaps they do not share your predictions and thus are buying whilst they consider the good time remain, who knows, the retail figures simply show what has been sold, not why.

      Reply Being good at predicting has never been a criterion for selecting Governors or Chancellors. If only.

      • Anonymous
        Posted September 16, 2016 at 9:24 am | Permalink

        Reply to reply – Cutting interest rates also hits hardest those who voted Brexit in large numbers.

        I believe it to be part of the softening up process for a second referendum.

        Lord knows, the hysterical screaming about what a disaster Brexit has been is bad enough to make anyone give up.

        • fedupsoutherner
          Posted September 16, 2016 at 10:28 pm | Permalink

          We were with friends this evening and they all said that Brexit will not happen. At the moment I am dubious too.

        • Jerry
          Posted September 17, 2016 at 7:06 am | Permalink

          @Anonymous; “Cutting interest rates also hits hardest those who voted Brexit in large numbers.”

          Does it? You seem to forget that some of the largest voter turn out for Brexit were in either Labour and/or low(er) income areas were many only ever dream of having money left over to deposit in a savings scheme or account.

          “I believe it to be part of the softening up process for a second referendum.”

          Whilst the vast majority will believe that to be just yet another conspiracy theory from someone still upset that the post Brexit (vote) power shift didn’t go as wished for.

          “Lord knows, the hysterical screaming about what a disaster Brexit has been is bad enough to make anyone give up.”

          But of the post Brexit vote hysterical screaming coming is coming from those who either do not wish to follow the evidence or see a conspiracy theory around ever bend in the road – the cries of woe from Europhobes such as you @Anonymous are becoming very McCarthyist in tone, a europhile under ever bed…

      • Jerry
        Posted September 16, 2016 at 12:35 pm | Permalink

        @JR reply; Well it hasn’t for at least the last 40 years I’ll give you that one!

    • acorn
      Posted September 16, 2016 at 8:12 am | Permalink

      Indeed Jerry, the government could build the plant at no net cost, it would just spend the money, as the currency issuer, and proceed to get it all back by payments for the energy sold. It does not have to issue Bonds and pay interest to anybody. The government does not borrow its own “money” from anybody ever.

      The process would be the same as all other government spending of its money into the economy and getting it all back eventually by taxation. It has to put up with people saving government “money” (units of account) and not spending it. Neo-liberals call those savings in the non-government sector, the government sector’s national debt.

      As Neil Wilson says, A monetarily sovereign government is able to get the best credit card deal in the world. It is a super-platinum credit card with the following benefits: It has no spending limit; It can repay itself; It has the best cashback deal in existence; Taxation.

      • Denis Cooper
        Posted September 16, 2016 at 9:35 am | Permalink

        “The government does not borrow its own “money” from anybody ever.”

        Perfectly true, when the “money” is in fact the government’s own “money”, as for example with the Bradbury pounds issued by the Treasury during WW1, but it certainly may borrow “money” when that “money” is being issued by some body which may be an arm of the state but is not actually part of the government, such as an “independent” central bank.

        Note the distinction between “central banks” and “governments” in Article 123 TFEU, by which the UK is still bound, and will continue to be bound until it finally leaves the EU, and conceivably in part even afterwards if unhappily that was part of the new arrangements:

        http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-the-functioning-of-the-european-union-and-comments/part-3-union-policies-and-internal-actions/title-viii-economic-and-monetary-policy/chapter-1-economic-policy/391-article-123.html

        “Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.”

        So the Treasury has borrowed from the Bank of England indirectly rather than directly, and now the Treasury owes around £383 billion to the Bank, or more precisely to a wholly owned subsidiary of the Bank which then owes that money to the Bank as such:

        http://www.bankofengland.co.uk/markets/Pages/apf/results.aspx

        “Purchases of Gilts £382,626mn”

        Of which £175 billion was authorised by a man who previously said:

        http://news.bbc.co.uk/1/hi/uk_politics/7817623.stm

        “Printing money is the last resort of desperate governments when all other policies have failed.”

        Adding:

        “It can’t be ruled out as a last resort in the fight against deflation, but in the end printing money risks losing control of inflation and all the economic problems that high inflation brings.”

        • acorn
          Posted September 17, 2016 at 6:28 am | Permalink

          Denis, the UK has an opt out for its “Ways and Means” account (National Loans Fund overdraft account) at the BoE. The Treasury does not use it but it still has £370 million in it.

      • Edward2
        Posted September 16, 2016 at 10:10 am | Permalink

        Venezuela and Zimbabwe tried the magic money tree theory acorn.
        Thee are limits to how far a nation can carry on before the rest of the world decides the tree needs pruning.

        • acorn
          Posted September 17, 2016 at 6:42 am | Permalink

          Those Latin countries were using a foreign currency money tree, borrowing in US Dollars and trying to peg their currencies to it. Similar to the Black Wednesday ERM crisis John Major had.

          The Euro zone has this problem, they are all using a foreign currency, which is basically the German Euro.

          Zimbabwe; the economy collapsed and there was nothing left to buy. Hence, hyperinflation of what little was left to buy.

        • Jerry
          Posted September 17, 2016 at 7:15 am | Permalink

          @Edward2; As did the Tory government between 1951 and 1964, and our national (war) debt was rather large… Not all “magic money trees” are the same, indeed a lot depends on how they are manicured and fertilised so to speak.

    • Anonymous
      Posted September 16, 2016 at 8:17 am | Permalink

      ” consumers might even be buying big ticket items before any possible post Brexit price increases.”

      If pessimism is behind it then it should be accompanied by people bailing out of the UK housing market by now.

      • Jerry
        Posted September 16, 2016 at 12:49 pm | Permalink

        @Anonymous; “it should be accompanied by people bailing out of the UK housing market by now.”

        That would depends on why they bought into the housing market, whilst consumers trying to beat a (perceived) price hike doesn’t necessarily equate to (the fear of) a ‘tanking’ economy.

        • Edward2
          Posted September 17, 2016 at 12:07 pm | Permalink

          Missing the point as usual Jerry
          We were talking about money printing.

          • Jerry
            Posted September 17, 2016 at 3:36 pm | Permalink

            @Edward2; You might be trying to (change the subject again and) talk about QE but was I or Anonymous when he replied directly to a point I made way up – about consumer spending, not QE…

    • Edward2
      Posted September 16, 2016 at 10:14 am | Permalink

      Jerry
      You would be the first to shout “told you so” if retail sales figures were down instead of up.
      But in your determination to see the worst of any post referendum news you are reduced to weakly saying”what do they prove”
      Your bias is showing.

      • Jerry
        Posted September 16, 2016 at 3:51 pm | Permalink

        @Edward2; Once again you try and pigeon-hole me into being either a Brexiteer or Remaineer, for me what’s now important is that the UK is as strong as it possibly can be, today, next week, next year, in 10 and 50 years time. And yes, if the vote had gone the other way and those who wanted to remain in the EU were now cherry picking their facts and figures, putting the best spin on then, whilst crystal ball gazing I would be just as critical in my comments.

        • Edward2
          Posted September 16, 2016 at 9:03 pm | Permalink

          How does my post try to do that?
          You have no counter to my observation that you would say “I told you so” if figures were poor.
          Yet as they are positive you say “what do they prove”
          Plain bias.

          • Jerry
            Posted September 17, 2016 at 11:04 am | Permalink

            @Edward2; “How does my post try to do that?”

            How about when you say;

            You would be the first to shout [../a pro-remain opinion/..]

            Stop trying to put words into my mouth…

            “Plain bias.”

            A bit rich coming from you (and others), whilst trying to dress up the referendum result as actual Brexit, the economic data for the last couple of months tells us nothing about the future and actual Brexit, it can’t as no one yet has a clue what sort of exit terms if any the UK will agree/be offered.

            Reply The forecasts made by Remain said the result of the vote would cause the hit to confidence

          • Edward2
            Posted September 17, 2016 at 12:11 pm | Permalink

            That doesn’t “try to pigion hole you into a Remainer or leaver” at all.
            It’s a comment about your negative spin on positive figures.
            Even our host tells you but your bias blinds you.

          • Jerry
            Posted September 17, 2016 at 4:17 pm | Permalink

            @JR reply; Did the market jitters, on the days following, not happen then? Later of course, fortunately, common sense returned, as have the markets, when most people realised that it was just a result, not actual Brexit, which is at least still two years away – time is still to tell who made the correct predictions, once we know what the future brings.

          • Edward2
            Posted September 17, 2016 at 10:19 pm | Permalink

            If you keep predicting a rainy day tomorrow then one day you will be proved right Jerry.

          • Jerry
            Posted September 18, 2016 at 8:12 am | Permalink

            @Edward2; Except that I am not making any predictions, I’m saying we need to wait. But if you want it your way then the same must be true of Brexiteers who keep predicting a blistering heatwave tomorrow, just because the last month or so has been hot – without relevant data, in this case for a time still at least two years away, both sets of predictions are just crystal ball gazing…

          • Edward2
            Posted September 18, 2016 at 6:38 pm | Permalink

            You are making predictions.
            You make mainly negative ones in nearly every post.
            You say we should wait.
            But life goes on and millions of people and millions of businesses carry on trading and every day new figures emerge which can be interpreted.

            Define “relevant” data.
            We have had resonably good data post vote.
            Much better than most experts predictions.
            When will you consider it “relevant” ?
            Some time in the future?

          • Jerry
            Posted September 19, 2016 at 4:54 pm | Permalink

            @Edward2; No, I am making no predilections at all, anything but predictions, I’m saying that no one can make any predictions until we know what the T&C’s of our Brexit are, or likely to be, and we will only know this once Article 50 negotiations start officially, the UK government having triggered A50 (or presents a Bill before parliament to repeal the 1972 Act of Accession).

            But if you still want to insist that I am making predictions then I must be predicting that no one can make predictions, not even myself…!

          • Edward2
            Posted September 20, 2016 at 9:16 pm | Permalink

            Oh well that’s good then.
            Next time you make a negative prediction about the future I will remind you of your statement here today.

    • stred
      Posted September 16, 2016 at 10:52 am | Permalink

      The government would be wise to avoid financing the EPR reactor if the experience of the Finns (above) is anything to go by. Unfortunately, the customer will be paying the price + inflation when complete, then for the next 50 years- say +25% and then triple. No wonder the Chinese were so pleased, as they think they can make them work, when their own are put right. What some MP should ask the minister is ‘ did Mr Osborne offer the Chinese the same deal to build their own design at Bradwell?’

      If so that will be on 14% on the bill instead of 7. Presumably all the other designs which are planned, which supply other countries at half the price, will expect £92.50+ inflation too, in the land of generous ministers who could not negotiate a reduction on a new car for cash.

      Then there are all the offshore windfarms, which are on £120-140/MWh. Will any others bring prices down? To say nothing of contraint payments which mean the owners make as much or more when they are not supplying as when they are.

      And then there are the subsidies to build gas and diesel back up stations, subsidies for tidal, subsidies for connectors to Iceland and Norway, the smart grid, smart meters and subsidies to tree burners which produce more CO2 than coal just when we are supposed to do the opposite. But we are told the bills will not be going up and living is a green utopia.

      • acorn
        Posted September 17, 2016 at 10:42 am | Permalink

        Don’t forget the £105 per MWh for a Drax generator to burn imported wood pellets. I think they are applying for a CfD for a third generator, not sure.

  8. Lifelogic
    Posted September 16, 2016 at 6:25 am | Permalink

    Where on earth is the logic in Hinkley C? It has been suggested that the threat of legal actions and incurring Chinese displeasure were the reasons not to cancel it. It would clearly have been far better to cancel it anyway. It is the wrong nuclear project and at the wrong time.

    Theresa has made her first big mistake with this, energy prices currently are only about 40% of the strike price. In ten years time (with more fracking and other technology improvements) they are likely to be even less in real terms. This especially as the climate alarmism religion is clearly proving to be a damp squib at best and a total con at worst.

    The tax and bill payer subsidy is huge and for what possible justification? There simply is none.

    • Lifelogic
      Posted September 16, 2016 at 7:31 am | Permalink

      This project hugely hampers UK industry in being competitive for many years to come. Are Theresa and Greg Clarke totally innumerate perhaps? If not why on earth are they giving this absurd project the go ahead?

      • graham1946
        Posted September 16, 2016 at 9:47 am | Permalink

        I’m not so sure this is correct. I too am against it and the cost. but surely as it will only produce at most 7 percent of the nation’s power, if we don’t do anything so foolhardy again, surely the cost of the power produced will be watered down by the other 93 percent? Only 7 percent for 30 billion? What a duff deal.

        However, I’m more concerned about Bradwell and Sizewell which are going to be Chinese designed and built, not just financed like Hinkley which the French are going to build. We are allowing them to experiment with their new technology in our land, far away fro theirs and no doubt give them a huge payday for it. Our politicians are truly idiotic.

        Also, what happens if when they get halfway through the build at Hinkley, the French decide they can’t afford it and threaten to walk away. It cannot be a risk free option as the government says – they just hope it will. This is another fine mess created by Laurel and Hardy Cameron and Osborne.

        This is an aspect of our politics I detest – too much power given to individuals via their sycophantic followers in parliament. A year ago, both these idiots could walk on water, today, barely anyone has a good word to say about them. We need something better. Our infrastucture should not be decided like this.

    • stred
      Posted September 16, 2016 at 10:58 am | Permalink

      They could have negotiated a deal where EDF built one of the 4 other types which already work reliably and are being sold all over the world with electricity at fixed economical prices. The only worked one so far is the base, which could be adapted. EDF engineers themselves have said another less complex design should be their next project. Perhaps some MP could ask the minister whether he is aware of the prices and choices of other reactors elsewhere.

  9. Richard1
    Posted September 16, 2016 at 6:29 am | Permalink

    Hinkley is clearly a bad deal for UK consumers, but Mrs May has obviously decided that the political & diplomatic fallout of cancellation would be such that it isn’t worth it. But let’s remember where the real blame should lie for this fiasco – with the Labour government which for 13 years closed coal fired power stations and engaged in fatuous green virtue signalling, but commissioned no new nuclear capacity (thanks also to green influence and pressure) at a time when it would have been possible to do so on much better terms than those agreed to in this deal.

    Let’s blow a loud raspberry whenever we hear Labour spokespersons critcizising the Government on Hinkley.

    • acorn
      Posted September 16, 2016 at 10:14 am | Permalink

      If the industry had not been privatised, we would not be in the mess we are today. The system has been run as a cash cow, since privatisation, with no long term asset plan.

      All forms of UK neo-liberal governments, don’t lead from the front; naively, they leave everything to the private sector to solve. With policy changes and inconsistencies following the electoral cycle, the long-term and consistent political backing received in France was sadly lacking in the UK. Now, the UK is dependant on foreigners; privatisation basically killed the UK’s indigenous nuclear build capacity, our government sold it to EDF in the end.

      When your essential infrastructure is flogged off to foreigners, they will just sweat the existing assets they have bought for profits. Why would they worry about replacing the capacity in the UK, they don’t live here!

      Mind you, Hinkley C at circa £25 billion investment cost; £8,000 per kilowatt capacity. The Chinese are building them for less than half that back home!

      • Anonymous
        Posted September 16, 2016 at 10:41 pm | Permalink

        Britain-for-Sale had a big part in it, yes.

  10. fedupsoutherner
    Posted September 16, 2016 at 6:33 am | Permalink

    The Hinkley project is an utter farce. It flies in the face of all the unbiased and those that are not set to gain financially opinions like that of Deiter Helmer. What is Mrs May doing? If we are to come out of the EU then it is easier to say that we are changing our energy policy and that we have enough renewables now (in fact we have too much) and are going to invest in a system that delivers 24/7. We have a situation now where more and more wind farms are being asked to shut down due to too much power at times and we have to pay them and then when there is no power due to no wind we have to rely on something else. We are going to need more reliable power before Hinkley is finished – if it ever does get off the ground. We have tidal power coming in wanting ridiculously high strike payments. Our energy bills are only going one way – UP.

    Is Carney intent on ruining this country with his latest announcement over interest rates? There is no need to worry pensioners and people with saving about lower still interest rates. I feel they just want the public to get agitated and then back out of Brexit.

    Honestly, how much longer can Mrs may hold off at least letting us know what she and other Brexiteers are planning.

    So far, under Carney and May the future does not look good. We are not going to see the real changes we all wanted after Cameron and we are not going to see a true Conservative party again.

    • turboterrier
      Posted September 16, 2016 at 7:00 am | Permalink

      F O S

      Our energy bills are only going one way – UP.

      You have not even taken into account the elephant in the room and that is the real cost when it comes to de-commissioning the turbines especially the blades. All the time that they have been turning there is not one country that has addressed this problem for safe environmentally disposal.

      • ian wragg
        Posted September 16, 2016 at 10:36 am | Permalink

        As a turbine engineer, I am puzzled as to why the turbine blades pose a problem. The turbine doesn’t come into contact with any radiation from the secondary circuit so where is the problem??

        • fedupsoutherner
          Posted September 16, 2016 at 4:04 pm | Permalink

          Ian

          While the wind industry is coming up with ideas for using old turbine blades, of which there will be many in the coming years, not every country has a solution to the problem yet as the following shows.

          Fortunately, most wind-turbine parts, including the foundation, tower, and components of the gearbox and generator, are recyclable. But turbine blades are another story because of their composition.

          Most turbine blades are made from composites, materials joined for their complementary properties. Today’s wind-turbine blades are usually made of a glass or carbonfiber reinforcement in a polymer matrix. The composite is designed for optimal aerodynamic performance and lightweight durability. It is not designed for recyclability.

          The concern with this is noted in a research paper by global wind-service provider, DEWI, and quoted again in an abstract published Cambridge University and posted on the European Wind Energy Association website:

          “Every kilowatt of wind power requires 10-kg WT blade materials, so predicted there will be nearly 50,000 tons of blade waste in 2020 rising to 200,000 tons in 2034. Currently, most waste is sent to landfill, which is not an environmentally desirable solution.” (Albers 2009)

          A study commissioned by Scottish Natural Heritage in 2013 forecast a much higher number, predicting that 225,000 tons of rotor-blade material globally would need disposing of each year.

          For an industry that prides itself on clean energy, these aren’t promising statistics. And particularly in country’s like Germany where EU regulations prohibit sending decommissioned wind-turbine blades to landfills altogether.

          Disposal of blades is difficult for most countries a the moment but whether a solution can be found is for the future. A different use is a maybe but disposing of them is a problem.

          • Jerry
            Posted September 17, 2016 at 4:28 pm | Permalink

            @fedupsoutherner; “Disposal of blades is difficult for most countries a the moment”

            Are you saying that these turbine blades are toxic (not radio-active) as a whole, or if cut up into smaller lumps of scrap?

          • Edward2
            Posted September 17, 2016 at 10:22 pm | Permalink

            Did you not read what he said Jerry
            They are a composite of materials that cannot be recycled
            So either they are chopped up and incinerated or they will have to go to landfill.

          • Jerry
            Posted September 18, 2016 at 8:23 am | Permalink

            @Edward2; You have a problem with that, I don’t unless they are toxic, hence why I asked about toxicity. Thus, and unless there is meaningful toxicity, there is no disposal problem beyond that created politically and by protest groups.

          • Edward2
            Posted September 18, 2016 at 6:43 pm | Permalink

            No
            If a part consists of a mixture of composite materials merged together then they cannot be separated in order to be recycled.
            Therefore they must go to landfill or incineration
            It has nothing to do with toxicity.
            So it seems turbine blades may fall into that problem area.
            It would cost a lot more to dispose of old blades as a result.

          • Jerry
            Posted September 19, 2016 at 5:26 pm | Permalink

            @Edward2; “Therefore they must go to landfill or incineration It has nothing to do with toxicity.”

            Care to explain why tipping non-toxic turbine blades, or anything else non-toxic for that matter, into a hole in the ground will (needs to) cost “a lot of money”?!

            Yes at the moment there are land-fill taxes (amongst others) but why not just repeal them once outside of the EU, after all such taxes were never anything more than a EU/Blair era stealth taxes. Let the Greens and LibDems etc. stamp their feet or jump about if they wish, when they do the government just needs to explain how everyone’s energy and building costs etc. will -or have been- reduced as a result, at the same time pointing out that the strict laws in relation to the dumping of toxic waste (or other contamination issues) have remained unchanged or are indeed being strengthened.

          • Edward2
            Posted September 20, 2016 at 9:21 pm | Permalink

            Oh Jerry
            It’s quite simple
            To be capable of being recycled a product needs to be able to be split into its different original constituent ingredients
            So a turbine blade if it is a composite means that it cannot be split successfully as usually under heat at manufacture has been fused together.
            Think cake
            Think separate ingredients
            Think mixed together and cooked.
            Difficult to separate
            Got it now?

      • stred
        Posted September 16, 2016 at 11:02 am | Permalink

        The Swedes are taking down their offshore windfarm after 13 years, while the same firm is selling them to us.

      • S Matthews
        Posted September 16, 2016 at 3:32 pm | Permalink

        Please expand on why the turbine blades represent a disposal problem. When they wear out they will simply be recycled.

        • fedupsoutherner
          Posted September 16, 2016 at 10:54 pm | Permalink

          S Matthews. Take a look at this site and it explains the problems involved. One suggestion is to sell them to poorer countries but I think this idea stinks. It would mean the poorer countries becoming poorer still and then being lumbered with the problem of disposing of the blades which if possible will be expensive. Still, never mind, as long as the developer can get away with the costs that will be ok. One big rip off from start to finish.

          http://orbit.dtu.dk/files/102458629/DTU_INTL_ENERGY_REP_2014_WIND_91_97.pdf

  11. David Price
    Posted September 16, 2016 at 6:50 am | Permalink

    “We need to put in place some UK power where the plant is here and the investors are here.”

    But why would someone invest in more power generation now unless they get the same or better guarantees on income as Hinkley?

    The Hinkley decision has put all our energy eggs in one basket that has yet to deliver anything, promises only very high costs and at worse will inhibit construction of any competing but necessary facility.

    Why no investment from our protected species of financial wizards in the first place?

    • Leslie Singleton
      Posted September 16, 2016 at 10:38 am | Permalink

      Dear David–I remember a friend and flatmate of mine who was a Director of Rothschild (Yes John I assume you know him) telling me (a very humble lending banker) in our dining room in the City how they never actually lend or invest themselves, not even small amounts. Wizards to a man but not with their own money. Nothing wrong with just providing advice I suppose. But Yes I personally have not the first clue why in a hundred million years we would allow, nay encourage, China and France to get in as deep as they have with Hinckley. Bonkers.

      Reply I was last employed at Rothschilds in 1989!

      • Lifelogic
        Posted September 16, 2016 at 3:59 pm | Permalink

        Who would trust advice form someone who is not prepared to put their money where their mouth is?

        It is rather like me saying to you give me you £1million I will gamble with it for you. I will take a big commission if you win and only a small one if you lose.

        Mind you the banks currently get away with paying .01% or less in interest yet lending it out at base +3 – base +30 or more!

      • Leslie Singleton
        Posted September 16, 2016 at 4:47 pm | Permalink

        Dear John–I was not making that any big issue and the lunch I am referring to was probably before 1989. Even so perhaps I should have said “knew” him. Memory weak but we were contemplating a Club Deal and I was truly shocked that Rothschilds would not even consider ante-ing up a penny. From even longer and weaker memory I recall that it was different with Hambros. Little idea how or why.

  12. Ian Wragg
    Posted September 16, 2016 at 6:56 am | Permalink

    You say any construction overruns on Hinckley Point will be born by the contractor. I understand we start paying for output in 2025 whether its running or not and are committed to paying for 35 years even if the technology doesn’t work.
    Only taxpayers could be expected to fund such crap.

    • stred
      Posted September 16, 2016 at 11:07 am | Permalink

      If so this would be completely insane. Surely they will not be paid for assumed output even if it doesn’t work. Perhaps another question for the minister.- If he says it is ‘commercially confidential’ everyone will know the answer is ‘Yes. i have dropped the biggest one yet’.

      • ian wragg
        Posted September 16, 2016 at 4:28 pm | Permalink

        stred, that’s not the only crazy piece in the contract. There is an assumed overrun of 8 years without EDF incurring any penalty. They don’t expect it to be up and running before 2030 with a fair wind. I have been following this contract closely over the years and it was written by idiots with no regard for taxpayers money.
        There should be an urgent debate in parliament and all the scams uncovered.
        Needless to say there are no intelligent people in the HoC to peruse the contract.

        • stred
          Posted September 17, 2016 at 2:10 pm | Permalink

          I am sure JR and Peter Lilley could. No ministers though. Suggest email the details.

  13. fedupsoutherner
    Posted September 16, 2016 at 6:58 am | Permalink

    I forgot to add John. You say that profits from Hinkley will be going abroad to foreign investors. Well, that’s no different to what is happening now with wind power. Nearly all the developers are foreign and just about all the turbines are manufactured abroad. Spain, Germany, Norway to mention a few all rake in the profits from wind turbines and wind farms. Hardly any of the money we spend on our energy bills to pay for the exorbitant prices they demand stays in this country. The renewables industry claims that it supports thousands of jobs but if you scrape the surface of their claims you will find that many were in positions that were already there in the first place. It’s just that they now claim it is loosely linked to renewables. I know from experience that the vast majority of people used to work on these large wind farm sites are from the country that is building the wind farm. There are not many British workers.

    We should have gone for gas and smaller nuclear sites that could have been funded by ourselves. Just where has basic common sense with ministers gone? Why can’t we have a leader that just wants the future of Britain to be a better one and dismisses all this ‘green’ garbage? It is so frustrating that Mrs May is still dancing to the tune of the rip off merchants from the renewables industry. No, it’s not just frustrating, it’s also bordering in criminal not to listen to the industry experts including those that used to run the National Grid when they say we need a sensible change.

  14. Iain Moore
    Posted September 16, 2016 at 7:15 am | Permalink

    “the £18bn inward investment is a positive balance of payments flow during build. ”

    While at the same time we will suffer from a £120 billion negative impact on our balance of payments by the self inflicted disaster that is our Aid program.

    No matter how hard I try I cannot understand the thinking of our political class, who tell us how wonder full some inward investment is for which, as you point out, will have profits exported at later date, while shovelling our cash around the world as fast as they possible can with Aid, with EU contribution and not forgetting all these hard working migrants are also repatriating their salaries back home, a sum which equates to the Aid program if not more. It is no wonder our country is looking so run down and threadbare.

  15. Antisthenes
    Posted September 16, 2016 at 7:23 am | Permalink

    Hinkley is a bad idea better, more quickly built and cheaper ways are available such as fracking and gas fuel power stations.

    Very rarely do I disagree with you but I believe you to be wrong in decrying foreign investment into the UK. You say it is because of our balance of payment deficit and it will have a negative impact on it. That is being over simplistic and not exactly true. The balance of payment is more analogous to the tide that goes out only to return again.

    The minister was correct in saying the 18 billion was a balance of payment positive and you were correct in saying that profits going to foreigners was a negative. However that is the point. A balance of payment deficit has to go somewhere. We know it is in foreign hands and as long as we make it attractive for foreigners to invest in the UK then that is exactly what they will do with it. It is therefore a zero sum outcome as is infrastructure spending. The former is therefore not to be feared many prosperous nations carry a continuous deficit and some who boast a surplus are not. The latter contrary to popular belief may be advantageous but it will not increase GDP if the money is home sourced.

  16. acorn
    Posted September 16, 2016 at 7:41 am | Permalink

    In August 2016 the quantity bought in the retail industry (volume) increased by 6.2%
    compared with August 2015; the 40th consecutive period of year-on-year growth but decreased by 0.2% compared with July 2016.

    Further down the report it says:- The amount spent (value) increased by 4.1% compared with August 2015 but decreased by 0.5% compared with July 2016.

    In the 4 week reporting period during August 2016, the amount spent in the retail industry was £28.6 billion (non-seasonally adjusted). This compares with: £29.8 billion in the 4 week reporting period for July 2016.

    It is far to early to measure Brexit shock, wait till Q1 2017. Expect the Pound to get another kicking when Mrs May sends Mr Tusk an Art 50 Valentine’s Card.

  17. Fred
    Posted September 16, 2016 at 7:43 am | Permalink

    So the Bank of England is inept and incapable of separating it’s political bias from reality. This has been true for years. That is grounds for dismissal I’d say. Better still do away with central banks altogether and regain freedom from massive government which is impossible without it’s bankster buddies.

  18. Bert Young
    Posted September 16, 2016 at 8:08 am | Permalink

    The scientific case is one loss as the result of the Hinkley go-ahead , the financial case is another . I cannot understand the logic of the Government’s decision to proceed with the EDF/Chinese co-operation in this project ; it denies an investment opportunity and it certainly means a high cost eventually to the consumer .

    Investment in infrastructure projects has been highlighted as one of the Governments’ objectives , Hinkley – surely , ought to have been at the top of the list . If it had not been for the summit in China – when Theresa was exposed to the International leaders for the first time , I do not think it would have been approved . Tail ending this case by preventing some control over a possible sale , means absolutely nothing . This is Theresa’s blunder – one she will regret .

  19. brian
    Posted September 16, 2016 at 8:32 am | Permalink

    Two things are needed to build a nuclear power station. Capital and expertise. We can raise the capital but we don’t have the expertise – we sold it to foreigners. An advantage of the HP arrangement is that the investor takes the build risk.

    Reply In practice the Uk customer will take the build risk. If the build gets delayed and more expensive the foreign owners will probably push back on the electricity price to get the job finished.

    • Anonymous
      Posted September 16, 2016 at 9:26 am | Permalink

      Brian – Ultimately the customer pays the price. It is not a good thing if the build project fails. Our country goes into partial shutdown if it does.

      It all shows what a disaster Britain-for-sale has been.

    • ian wragg
      Posted September 16, 2016 at 10:39 am | Permalink

      but John, as I pointed out earlier, we start paying the strike price for base load even if the plant doesn’t run. If we de-commission before 35 years we have to continue paying even if it’s because of defective technology.
      Only civil servants could agree to such nonsense.

  20. Caterpillar
    Posted September 16, 2016 at 8:46 am | Permalink

    Assuming ian indent bank, is Mr Carney really the best person for the job?

  21. Denis Cooper
    Posted September 16, 2016 at 8:52 am | Permalink

    “When the government can borrow at 1.5% for 50 years we could even consider putting some state cash to work … ”

    Sounds a bit Corbynesque!

    However it may well be cheaper in the long run to get the Chinese to buy gilts at low interest rates and use that money to fund projects, rather than getting the Chinese to put their money into specific projects with potentially much higher rates of return for them to be paid by us over the following decades.

    In fact it might be better to ask the Bank of England to buy the gilts, and once we are out of the EU we will no longer be bound by the EU treaty prohibition on the direct funding of governments by their central banks.

  22. Mark
    Posted September 16, 2016 at 9:35 am | Permalink

    What is so disappointing about the Hinkley decision is that it betrays Mrs. May’s promise of cheaper energy, which households and industry need. The contract price for power is based on 2012 prices, and is already over £100/MWh in current prices. We already have estimates that the implied subsidy will cost £30-50bn over the life of the power station, while the investors should see a return of 10% if the plant is built on time and to budget.

    Because of the guaranteed price, which is substantially above the cost of fuel and day to day operation, Hinkley will operate flat out 24×365 less only periods for statutory maintenance or equipment failure.

    What is so bad about this decision is that the Moorside project in Cumbria to build 3.8GW of AP1000 design nuclear power is estimated to cost just £10bn – or less than half the cost per GW at Hinkley – even assuming no cost overruns and delays on the £18bn overnight cost currently being quoted for the latter’s 3.2GW. Moreover, being based on established technology, Moorside is far more likely to start up on time and on budget. If we stuck to a series of power stations of similar design there would be benefits from the learning curve effect in lowering construction cost and time. Moreover, the South Koreans, who build nuclear plant cheaply and efficiently, are showing interest in becoming partners in that project. The cost is low enough to need little to no subsidy.

    Did Mrs. May not ask President Xi about the construction problems for the EPR reactors at Taishan 1&2 just 80 miles from Hong Kong? Did she not enquire why the Chinese have decided not to build any more EPRs in China, despite originally agreeing a programme of 6 reactors with the French during which the Chinese were to learn how to build them themselves? Did she not consider how to use technology transfer to get back our nuclear industry, so foolishly sold off under Labour?

    Did she really mean what she said about cheaper energy for the British economy?

  23. fedupsoutherner
    Posted September 16, 2016 at 10:05 am | Permalink

    Hasn’t Mrs May heard that much of our heavy industry (steel, aluminium, glass etc) has been shut down or in danger of doing so due to high energy costs? Or is it a case of not caring? When is the government going to start taking charge of fracking? Why are they letting the film luvvies take control over our energy requirements? Does Government not listen to people who really know what is needed or are they incapable. In the case of Anna Soubrey she is incapable of listening to anyone because she can’t keep quiet for long enough. I read today that Germany is going to still use brown coal and German steel workers are unhappy with EU energy policies, and Turkey is to build 80 coal plants. But our failing leaders have signed the death warrant for industry in the UK by agreeing to the EU’s policies while they fail to implement them themselves. It’s like watching a Carry On film but without the laughs. Labour, the coalition and the Conservative parties will go down in history as being the governments that broke British industry and expected the people to pick up the pieces.

  24. forthurst
    Posted September 16, 2016 at 10:20 am | Permalink

    Sadly, another stonkingly bad deal for UK plc. Adding to the woeful financial profile of the deal, are the technological issues associated with the design and construction, together the appalling track record of AREVA bailed out and now majority owned by EDF following the fixed price contract at Olkiluoto 3 having proceeded as usual rather than according to their unrealistically optimistic expectations.

    http://www.telegraph.co.uk/news/2016/05/03/frances-nuclear-giant-areva-admits-to-400-irregularities-in-nucl/

    There seems to be an idea that the way to advance nuclear technology is to increase the complexity of the method of transfering the heat energy made by the nuclear reactor into the rotational energy of the turbine; however, major advances in nuclear power technology can only occur in designing improvements to the nuclear reaction itself with the objective of increasing safety, reducing or eliminating radioactive waste and the requirements for down time for refuelling etc. On these scores, Hinckley is not an advance at all.

    Having Hinkley following closely on the sale of ARM Holdings, leaves one very pessimistic about the ability of this government to stand up for British interests even if it means upsetting foreigners and the capacity to do a proper cost/benefit analysis on any financial proposition with its comcomitant incomings and outgoings now and in the future together with its impacts on British industry for which both these deals are very negative.

    • Ed Mahony
      Posted September 16, 2016 at 9:37 pm | Permalink

      ‘Sadly, another stonkingly bad deal for UK plc’ – without the huge pressure of Brexit on the government’s time, thought and energy, I’m pretty sure Mrs May would have said no to Hinkley. And it’s not just the pressure of time, thought and energy. It’s also that Mrs May is scared of upsetting the Chinese in any future possible trade deal. 1. Because of Hinkley. 2. China is already a bit peeved with Brexit when many of its investors invested in the UK using the UK as a gateway into the EU (they haven’t been as vocal as Japan, but China’s made no secret either of its opposition to Brexit).
      So I’m pretty sure we can blame Hinkley (and the loss of ARM to Japanese investors – due to drop in pound post Brexit) on Brexit.

      • forthurst
        Posted September 17, 2016 at 12:10 pm | Permalink

        Without Brexit, Mrs May would not be PM so all in all an entirely hypothetical argument.

        • stred
          Posted September 17, 2016 at 2:22 pm | Permalink

          And the twit that offered the deal to the Chinese would still be chancellor. What a complete reversal of logic!

  25. Roy Grainger
    Posted September 16, 2016 at 10:48 am | Permalink

    “He stressed that all the construction risk – risk of cost and time overruns – rests with the French and Chinese investors. ”

    Hard not to smile. Let’s see what the government says when they have to step in with taxpayer’s money to keep the project going after massive delays and cost overruns have caused the original investors to threaten to cancel the entire project.

  26. ian
    Posted September 16, 2016 at 10:57 am | Permalink

    Hinkley point, the 92.50 price goes up with inflation and with BOE head being the number two banker in the world wanting to go negative on interest rates they might get paid to build hinkley.

    I see the old chancellor is making come back with the northern power house and devolution of cities like Manchester and the people behind upik are going back to the con party and are trying to disband it, so there might only be three main parties again in england to vote for.

  27. stred
    Posted September 16, 2016 at 11:19 am | Permalink

    An article on the Swedish firm Vattenhal, which is decommissioning their own offshore windfarms after 13 years, while selling large numbers of them to us. They are going to build them in better sites. Ours will be way out at sea and even more difficult to build and service.

    http://www.powermag.com/vattenfall-completes-worlds-first-decommissioning-offshore-wind-farm/

    • ian wragg
      Posted September 16, 2016 at 4:34 pm | Permalink

      stred. No doubt when ours come to be decommissioned they will belong to some offshore hedge fund which will mysteriously vanish and it will be left to the UK taxpayer.
      Our local windfarm has had a turbine down over a year due to a broken blade and I believe that is uneconomical to repair only being in service 8 years.

      • fedupsoutherner
        Posted September 16, 2016 at 10:38 pm | Permalink

        Ian, our local medical centre has a wind turbine and when it broke down it cost mega money to get the spare parts from the USA. It was only 4 years old and not run all the time due to excess noise which disturbed the doctors.

        The company agreed to pay for the repairs in the end but I feel only because it was a hospital/medical centre and there was a lot of publicity about how it would save them money when it was first erected.

  28. Richard Butler
    Posted September 16, 2016 at 11:32 am | Permalink

    John, a question (don’t feel the need to reply though, you are busy enough);

    Many small British investors would happily invest in something like an ISA specifically providing capital for Hinkley Point. I understand the Chinese anticipate a 9% yield. I would suggest small UK investors would be very happy with even 5%.

    Is this idea of us all investing (by choice) in such UK infrastructure a silly idea, or something big Govt has over-looked?

    Reply I agree it would be better if we were allowed to invest

  29. ian wragg
    Posted September 16, 2016 at 11:36 am | Permalink

    I see from Guido that the Brexit select committee is going to be chaired by Hilary Benn arch remainiac.
    You couldn’t make it up.

  30. BOF
    Posted September 16, 2016 at 11:53 am | Permalink

    A bit of posturing by Mrs May before waving through Hinkley C instead of speeding up Fracking and building gas fired power stations. Hinkley C may be the most expensive energy ever, including greencrap, but never mind, the poor old British consumer is paying the bill. And if they get short of money we have the dangerous Mr Carney at hand to print more money, Zimbabwe style.

    Expect more of the same for HS2.

  31. Denis Cooper
    Posted September 16, 2016 at 11:58 am | Permalink

    JR, will the Chairman of the Brexit Select Committee be elected by MPs, and is there any chance of preventing that person being Hilary Benn or any other eurofanatic?

    Reply Yes they will be elected. We do not yet know which party will take the chair.

  32. Ed Mahony
    Posted September 16, 2016 at 12:51 pm | Permalink

    I think you’re absolutely spot on about Hinkley Point. Although I disagree with you about the EU, you should be in government advising the PM about things like this.

  33. ian
    Posted September 16, 2016 at 2:08 pm | Permalink

    Italy front and centre with 17.5% non forming loans, financial system bracing it self with more bad loans to come with germany big bank and economy set to take the hit.

  34. Ed Mahony
    Posted September 16, 2016 at 3:12 pm | Permalink

    Btw, the Tories need to look more at wind energy. There are SOME in the Conservative Party, who for ideological reasons, think you’re a Liberal Democrat luvvie or something for being pro wind energy when they’re actually just being luddites, ignoring what’s going on in modern science (—> ‘Britain’s vast national gamble on wind power may yet pay off’ – by AMBROSE EVANS-PRITCHARD – Telegraph, Business).
    Yes to nuclear energy. But yes also to wind energy. (And other forms of energy obviously).

    • turboterrier
      Posted September 16, 2016 at 5:15 pm | Permalink

      Ed Mahony

      ‘Britain’s vast national gamble on wind power may yet pay off’ –

      The only wy it will pay off is that the domestic and industrial consumers getting hammered to keep the subsidies going.

      There are 56 million people in the rest of the UK being hammered with their bills all the while hundreds of Scottish communities are saying a big thank you for all the payments they get from the windfarm developer,s some are getting so much money they are at a lost how to spend it.

      But will the governments put a stop to all this madness? In your dreams.

      • Ed Mahony
        Posted September 16, 2016 at 9:22 pm | Permalink

        Never said the old wind power technology was efficient. I’m talking about the new stuff. Employing the old stuff was primarily about ethics. Employing the new stuff is primarily about good business / energy-industry sense (plus you’ll win support from those who support wind for ethical reasons and get more votes).

    • ChrisS
      Posted September 16, 2016 at 6:10 pm | Permalink

      You can’t have wind without 100% backup from reliable sources like gas or nuclear.

      It is pointless continuing down the wind route, anyway, nobody wants the damned things in their eyeline at home or on holiday.

      Yes, we should be investing in more nuclear like the French have done using production line standard reactors which would keep the cost right down. It’s too late to stop HP, a ruinously expensive system untried in service anywhere for any time at all. Both projects using this model elsewhere are way over budget and running very late.

      Hitachi have a much cheaper system ready to go and an England-based company to implement it. We should finance multiple reactors on their model at several sites.

      Nobody could seriously argue that HS2 should continue on any reasonable economic assessment of its value to the average taxpayer. I think the figures were £3,000 for every household in the country and less than 5% of them would ever use it !!!

      Spend the money on better roads all over the country which would benefit everyone, even those without cars.

      • Ed Mahony
        Posted September 16, 2016 at 9:29 pm | Permalink

        ‘You can’t have wind without 100% backup from reliable sources like gas or nuclear’

        – Studies from Harvard have found that China could meet all of their electricity demands from wind power through 2030. The new wind turbines they are creating nowadays, in particular, for sea are quite amazing. Let’s stick to what the scientific experts are saying and not those influenced by subjective political ideology.

        • Ed Mahony
          Posted September 16, 2016 at 9:31 pm | Permalink

          (I still support nuclear and gas, I’m just saying it would be crazy to ignore wind as many still do – and ignore for silly, political ideological reasons).

          • Mark
            Posted September 17, 2016 at 1:12 pm | Permalink

            The reasons to cut back on wind are economic and practical. It is only the ideologues who think that is makes sense to invest in power that costs 5-6 times as much as conventional power before allowing for the cost of the backup it requires.

        • Mark
          Posted September 17, 2016 at 11:21 am | Permalink

          Let’s stick to reality. China produced just 2% of its energy through renewables in 2015. That is despite producing 22% of the world’s wind energy. China has actually called a big slowdown in wind investment, because it cannot be adequately connected to the grid, and when it is, it is disruptive and leads to unstable supplies: they then curtail wind generation in favour of reliable coal.

          The Harvard study is frankly nonsense: it dates from 2009, and has already been disproved by the practicalities they failed to consider.

    • S Matthews
      Posted September 16, 2016 at 6:26 pm | Permalink

      Wind energy can not be a useful energy supply until cheap electricity storage becomes available. Its that simple.

      • fedupsoutherner
        Posted September 16, 2016 at 10:40 pm | Permalink

        S Matthews. It may be invented but in no way will it be cheap. We have enough people dying from the cold in this country now. I think John, we can safely say that the general public don’t think much of Mrs May decision on Hinkley.

  35. ChrisS
    Posted September 16, 2016 at 9:02 pm | Permalink

    What a complete whitewash the BBC has posted about the Bratislava summit ! :
    http://www.bbc.com/news/world-europe-37388159

    No mention of the huge rift between Italy, and her French and German partners that resulted in Matteo Renzi refusing to take part in a joint press conference with Merkel and Hollande. Surely this is a massive blow to the future credibility of the organisation ?

    Is there no limit to the depths the BBC will go to in acting as the propaganda arm of the European Commisson ?

    • Mitchel
      Posted September 17, 2016 at 12:26 pm | Permalink

      Is Renzi’s huff genuine or is he posturing ahead of his referendum?

  36. CHRISTOPHER HOUSTON
    Posted September 16, 2016 at 11:09 pm | Permalink

    A mystery though doubtlessly you understand JR about the roles of a British PM and a Home Secretary. How come Mrs May as Home Secretary was not privy to the ins and outs of the Hinkley deal? As PM she is alleged to have delayed authorisation because of her own long-standing security concerns and her lack complete knowledge. I guess we mortals will never know. But many of us did believe a British Home Secretary was in daily contact with the James Bonds of the Establishment.

    It is quite remarkable how politicians have edged the British people from “Nuclear” being a leukaemic sci-fi nightmare of environmental disaster to one where it is perceived as a healthy green alternative like eating a wonderful cress sandwich instead of a proper meal of fish and chips. But I suppose a set of people like politicians who can persuade mothers to pay strangers to look after their kids while they labour for 8 hours per day in a noisy overbright or dim factory in an environment of intoxicating liberation like sat in front of a boss with attitude watching you slave away is like falling off a log by comparison.

    There seems nothing however outrageous and bizarre British people will not enthusiastically embrace if told they are oppressed or exploited if they don’t. After all, they each have bought at least one fridge on an island where a national disaster is declared and an amber alert sounded if the sun shines more than two days in a row.

    Reply As I understand it it was because of worries she had as Home Secretary that she thought were not dealt with at the time that she reopened it on becoming PM

  37. Antisthenes
    Posted September 17, 2016 at 6:23 am | Permalink

    This is well worth the read :- https://mises.org/blog/why-eu-doomed. It sets out why the EU will fail. Most of the reasons we already new or guessed at but it does endorse our thinking and that by a very eminent economic think tank that generally is correct in it’s analysis.

  38. am
    Posted September 17, 2016 at 7:10 am | Permalink

    Britain needs internal industrial regeneration led by internal investment. Your balance of payments point about Hinckley is correct. A major concern is why do UK investors seem incapable of starting UK projects and leave it to overseas investors and companies. The latter are very happy with the returns as is seen by the large primary income debits flowing out of the UK.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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