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Hinkley Gets the Go Ahead; What Does it Mean for the South West?

Joanna Watchman's picture
Content Coms

Joanna is Founder and Managing Director of Content Coms, a B2B communications consultancy specialising in the energy and technology sectors. An award-winning communications consultant with over...

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  • Sep 23, 2016


With more plot twists than an edition of the Archers (a Content Coms favourite…), Britain’s next nuclear power station has finally been given the go ahead by Teresa May.

The news has dismayed NGOs like Greenpeace, and embittered the renewables lobby. Today, it’s impossible to predict with surety whether the reactor can be built on time and what its enormous strike price imbalance will truly mean.

Amid all the speculation, is any clarity available on what the station will mean for the local area?

The South West; Hinkley’s best friend?

In a recent letter to the Financial Times (FT), a number of notable names predict some big gains for the region. ‘The project will provide a vital part of the UK’s industrial strategy, which will need a predictable and stable energy policy framework at its core,’ they argue.

‘Hinkley Point will create thousands of jobs, hundreds of apprenticeships and billions of pounds worth of contracts for companies in the UK supply chain.

‘A groundbreaking agreement has already been developed between the company, the trade unions and the suppliers, as have impressive education and training facilities at the site. The project will represent a massive shot in the arm for the economy of the south-west of England.’

Minnows the commentators are not; they comprise Sir Richard Lambert, Former Director-General, CBI, and erstwhile editor of the FT.

Diane Coyle, OBE, Professor of Economics at Manchester University is onboard, so is Lord Patten, previously Governor of Hong Kong. The ex-Chairman of Rolls Royce agrees with the sentiments too.

Their view plainly is; make the best of the supply chain and knock on business opportunities. It’s tough to deny this logic. But do the wins stack up?

The negatives for the South West

Depending on your viewpoint, nuclear is either plain dangerous, or a much-needed solution to a problem.

From an economic point of view, jobs and money will flood into the region, but people must still pay for Hinkley’s strike price through electricity bills. Estimates on the agreed price show the Government’s deal is looking worse by the day.

EDF won’t declare how much profit it will make from the deal. One thing we do know is that EDF isn’t a UK, or a South West firm. Nor is the Chinese partner. The taxpayer’s subsidy will, for certain, contribute to some profit flowing out of the south west into France and Asia.

The question is whether local supply chain opportunities offset this, and do the ongoing employment options offer a fair trade off?

Nuclear insider says EDF has already pledged Hinkley contracts with a combined value of £225 million to five local supplier consortia. In July 2015 the company named 21 preferred bidders from the UK, for contracts with a combined value of £1.3 billion that ranged from construction to catering.

UK-wide, a “large proportion” of Hinkley Point C steel requirement will come from UK companies, subject to a competitive process, it appears.

Against these elements, in another analysis, the FT estimates EDF and its Chinese partner stand to generate a profit of tens of billions.

Tens of billions vs the £1.3 billion and £225 million? It’s not the best arrangement, but it’s still money for UK firms that wouldn’t be there otherwise. Then again, this doesn’t include consumer rises on energy bills; the Telegraph says Hinkley will cost £12 per UK household; we had 26.7 million of these in 2014.

That’s £320 million in total, wiping the £225 million EDF pledges off the map. Content Coms isn’t a dedicated research firm, but unless we’ve missed major Hinkley contracts and benefits as yet unrevealed, the numbers seem skewed towards the foreign investors, not the south west.

Rather, the South West is where the risk lies if anything goes wrong. ​

How Brexit broke the anti-Hinkley lobby

No matter what the long term financial fallout of Hinkley and for the South West, Teresa May’s arms were tied long ago, by David Cameron and Nigel Farage.

The Brexit referendum was conceived to clarify Tory divisions. No one thought the UK would actually vote out. When it did, May was left in an untenable position on Hinkley.

France is a strong player in Europe. What were the chances of the French allowing a beneficial negotiation for the UK on Brexit, if Hinkley fell through? Nil.

China, meanwhile, is the world’s top industrial nation, experienced and fearless in negotiations. Knowing the UK is skating on thin ice with Europe, China put out thinly veiled signals that stopping Hinkley would end Eastern trade cooperation with the UK, just when we need it most.

Mr Farage and his friends can shout as hard as they like in the European Parliament, but there are reasons why the other delegators are laughing so hard. The promise of a more profitable post-Brexit UK has directly led to an agreement that will send tens of billions overseas.

Mr Cameron, meanwhile, is invisible, wisely resigning his constituency. Today, Boris Johnson is silent on Hinkley. But last year he said its estimated cost was disgraceful; ‘an extraordinary amount of money.’

What’s most extraordinary about the Hinkley debate is the short-sightedness that led to today’s circumstances, in which the final decision was forced, not made.

Some feel this has made Britain the laughing stock of the world. Others take a different view. But, who is right? The proof will perhaps be in the pudding (cooked, perhaps in an oven powered by nuclear… )

Content Coms is an communications consultancy specialising in the energy and energy efficient technologies. To find out more read more of our energy-related articles & content.

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