Government needs U-turn over mania for nuclear plants

Here’s a report that must not be lost in the noise of Brexit. The National Infrastructure Assessment is a once-a-parliament affair from a body that was created to save us from the deadly combination of politicians’ machismo and the electoral cycle.

More prosaically, the National Infrastructure Commission’s job is to inject long-term strategic thinking into the critical business of building important stuff. Its first report contains a devastating conclusion: the government should drop its obsession with building more and more nuclear power stations.

The NIC still imagines one more nuclear plant, on top of Hinkley Point C in Somerset, before 2025, but the contrast with the government’s current approach is stark. Energy ministers for a decade have told us that a “resurgence” in new nuclear in the UK is the only way to keep the lights on while simultaneously reducing carbon emissions. As for the hideous costs of Hinkley on our energy bills for 35 years, we were told they must be swallowed to get the nuclear show up and running again. Another six plants could be needed, it has been claimed.

Sir John Armitt, the NIC’s chairman, has cut through this cultish logic with admirable ease. There is no need to rush with nuclear because “during the next 10 years we should get a lot more certainty about just how far we can rely on renewables,” he says.

Well, quite. The major development in the energy market in the past decade has been the plunging price of renewables. Costs have been cut faster and further than assumed in Whitehall. In last autumn’s capacity auction, the “strike prices” for two big offshore windfarms came in at £57.50 per megawatt hour and a third at £74.75. These figures – the guaranteed price for the electricity generated – compare to Hinkley’s £92.50.

The next generation of nuclear plants really will be cheaper, the industry likes to claim, yet its boasts tend to rely on the assumption that a bigger slice of the construction risks can be shoved on to the government’s balance sheet. Even if such “clever” financing models were deemed desirable, however, they don’t change the basic facts. From a purely financial perspective, offshore wind and solar are the cheapest bets.

Some “baseload” nuclear may still be required for security of supply but the NIC’s conclusion merely sounds like common sense: the UK shouldn’t rush to tie itself to an expensive nuclear future; it should back renewables to continue becoming cheaper; and it should see what developments arrive from the world of storage technology, which could change the game again.

The government, when it gets back to governing, needs to respond. Its mania for new nuclear plants has looked out-of-date, wrong-headed and unnecessarily expensive for ages. Now even its own infrastructure adviser agrees. A U-turn is required.

Can Mothercare win back consumers?

A decade ago Mothercare had 425 stores in the UK. By 2014 the figure was 220. Today it is 140 and, on the latest restructuring plan, the group will be down to its last 77 within a year, at which point it will supposedly emerge as a lean and restructured business that is “fit for purpose”, as the interim chairman, Clive Whiley, puts it.

His predecessor, Alan Parker, promised the same “sustainable” outcome many times over the years, so shareholders should approach with extreme caution. On the plus side, the latest rejig was accompanied by hard talk about £19m of cost savings from rent reductions, store costs and central overheads as the CVA process is completed. Those savings will plainly help.

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The missing ingredient, however, is firm evidence that Mothercare can back win consumers in the age of Amazon and stronger competition from supermarkets. The chief executive Mark Newton-Jones’s sermon about “exciting” plans to “revitalise the brand” has also been heard many times.

The share price has sunk so low there’s no point in shareholders throwing a tantrum. The £32.5m fundraising, which will double the number of shares in issue, is underwritten, so the company will get its cash whatever happens. But a point to remember is that the company last paid a dividend in 2012. Greater retailing recoveries have happened – but Mothercare’s decline is not new.

A flicker of fear over Labour’s nationalisation plans

The FTSE 100 index rose 1% on Monday, seemingly ignoring the excitement in Westminster. Look beneath the surface, however, and four of the few fallers were companies in Jeremy Corbyn’s sights. The water companies Severn Trent and United Utilities were down 3% and 2% respectively. National Grid and Royal Mail also shed a little value. One couldn’t call it a shudder of fear among investors over Labour’s nationalisation plans – but it was a flicker of worry.


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