Coalition focuses its energies on the future
The coalition today took the long view in solving the energy crisis facing the UK as the Department for Energy and Climate Change (DECC) announced that the first new nuclear power station in a generation will be built at Hinkley Point in Somerset. Ed Davey, DECC’s cabinet minister, also announced that prices for electricity from the new power station will be fixed at twice the current market rate. This is apparently “good value for money”, coming as it will when the facility starts operating sometime in the 2020s. While this gives something for everyone to look forward to, the news that Npower became the latest energy company to raise its prices by around 10% does suggest that today’s consumers may have to wait for that value.
Ed Miliband’s price freeze announcement, made at last month’s Labour party conference, is therefore a worry for the government, with its suggestion that the present coalition is on the side of the big energy companies and not the consumer. The announcement today, particularly the news that EDF and an assortment of Chinese companies will be taking control at Hinkley, is unlikely to persuade public opinion otherwise, with initial commentary suggesting that the deal is better for investors than consumers.
Labour’s attack around the short-term cost of living crisis is prevailing over the Government’s own longer-term economic growth narrative. The good news around Hinkley, that about 25,000 jobs are expected to be created during construction of the power plant, as well as 900 permanent jobs during its 60-year operation, should be playing straight into the Government’s Plan A plus narrative. With energy infrastructure a massive part of the plans to drive the UK towards economic recovery, projects such as Hinkley are necessary to “get Britain building again”, one of Cameron and Osborne’s oft repeated mantras. Yet with prices rising today, meaning less in the pocket of the electorate, for all of the Government’s long term plans, Ed Miliband’s price freeze promise looks more and more inviting. Hinkley may well prove a hit in the future but it’s unlikely that voters will think that far ahead.