Security is not the only reason to cancel Hinkley. There are many others
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Version 0 of 1. The proposed new nuclear power station at Hinkley Point in Somerset has turned into the first headache for Theresa May’s government. The issue is now about far more than Britain’s energy policy. It is about foreign policy too. May is yet to say anything publicly about the government’s decision to review the £18bn project. The only official comment was from Greg Clark, the new business, energy and industrial strategy secretary, who welcomed EDF’s approval of the project but added: “The government will now consider carefully all the component parts of this project and make its decision in the early autumn.” On the face of it, taking time to review such a controversial project is sensible. After all, there are genuine doubts about whether EDF, which is 85% owned by the French government, can build the plant and its European pressurised reactor (EPR) on time, on budget and safely. The National Audit Office has warned that taxpayers could end up paying more than £30bn through a range of subsidies designed to support the project. But the role of China has taken centre stage. The China General Nuclear Power Corporation (CGN) has a 33% stake in Hinkley, with a gentleman’s agreement that it will go on to build its own nuclear plants in Britain. Last week it emerged that CGN and a consultant to the company have been charged in the US with conspiring to help the Chinese government develop nuclear material. We now know, thanks to Vince Cable, that May raised security concerns about that while home secretary in the coalition. Her joint chief of staff, Nick Timothy, wrote last year that David Cameron’s government was “selling our national security to China”. No one in May’s new government has done much to move people away from the idea that it is concerned about China’s involvement in Hinkley. That is presumably why China’s ambassador to the UK said last week that Beijing’s relationship with the UK was at a “crucial historical juncture”. Britain’s relationship with China, the world’s second-biggest economy, is clearly at risk because of the plant. The fact that the Hinkley saga – which has rumbled on for a decade – is reaching a climax just weeks after Britain voted to leave the European Union adds another ingredient to the mix. Lord Mandelson, the former business secretary, says Britain must show that it is open for business and “can’t be too fussy about who we do trade with”. Mandelson’s comments represent the extreme end of one side of the argument, with Timothy’s at the other. Britain must find a way to work with China, a key investor in London Heathrow, Canary Wharf and football clubs. It could also back other key infrastructure projects such as High Speed 2. China has already shown it is keen to invest in Britain, where the legal and regulatory system offer the reassurance of a safe haven for assets. Security, of course, should be a concern. But when Britain agreed to sell British Energy to EDF for £12.5bn in 2008, it became inevitable that foreign investment and expertise would be needed to build new nuclear power stations. The only way, therefore, to develop a home-grown energy policy is to move away from large Hinkley-type projects, either towards forms of renewable energy or towards smaller nuclear power plants, which Rolls-Royce can build. But if the government does decide to scrap Hinkley Point C, the decision should not be about security: it should be because alternatives offer more value, efficiency, and safety. The potential cost to the taxpayer through subsidies to EDF and China, and the question marks about the EPR reactor – there still isn’t one in service anywhere in the world – are more pressing concerns than Chinese involvement. If the government does scrap Hinkley Point C, it must outline the alternative route it intends to take – and then ensure there are no hard feelings in Beijing. Inheritance tax law needs reform The Dukes of Westminster have had almost as much influence on tax law as they have on the garden squares of Mayfair and Belgravia. The £9bn property fortune now passing to a new generation would probably not exist today without a legal environment moulded over time by the very richest families. The second duke, famous for his four wives and a love affair with Coco Chanel, was more cautious with his finances than his personal life might suggest. In 1936 he won a case in which the judge stated that every man was entitled to arrange his affairs so that the tax owing was “less than it otherwise would be”. The ruling has been a thorn in the revenue’s side ever since. The trust structure from which the 25-year-old Hugh Grosvenor and his sisters will benefit dates from his death in 1953. For the Grosvenors, the 40% death duties incurred by normal estates do not apply. Trusts can last for up to 125 years, with wealth flowing freely from one generation to another. Campaigners are calling for the beneficiaries of family trusts to be named on a public register, and for trusts to publish annual accounts, as private companies do. Lobbyists in the thriving wealth management industry argue that opaqueness provides protection. Research suggests as many as a quarter of the beneficiaries are either children or vulnerable adults. A public register would expose individuals who have access to significant sums. But the secrecy arguments are weak. These vulnerable individuals do not control the money from which they benefit – that responsibility lies with competent adult trustees. The latest available data shows the number of trusts registered with the tax office has fallen slowly over time, to 160,500 in the financial year ending in March 2013. But their total annual income has risen to £2bn. The degree to which trusts should be taxed is up for discussion, but the argument for transparency has surely been won. Stop whingeing about apprenticeships Depending on who you listen to, the government’s planned apprenticeship levy is a desperately needed scheme to address Britain’s chronic skills shortage or a badly designed payroll tax that will drive down the quality of training. Both sides were out in force to make their case on Friday when the government confirmed it was launching the levy next April and ignoring the calls from business for a postponement in the wake of the Brexit vote. Just days earlier, Downing Street had faced down calls from corporate lobbyists to slow the implementation of the national living wage. Critics who say that the design of the apprenticeship levy needs tweaking to get the kind of schemes we need may be proven right. But Theresa May’s government is right to press ahead with an April launch. May said last week that she wants to tackle inequality, and creating more routes into secure jobs with good career prospects is a key part of that. |