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Nuclear privatisation scam: public subsidies but private profit

According to advisers to the Department of Energy & Climate Change (DECC), the government is now giving consideration, on top of the economically very foolish decision to go ahead with a new nuclear plant at Hinkley C in Somerset, to building not another 10 as was originally mooted, but 50! The French EDF and its co-financing Chinese partner refused to proceed with the project (knowing that they had the UK government across a barrel because otherwise there would a big black hole in energy provision in the early 2020s) unless they received potentially enormous public subsidies – cover in case of a major nuclear accident, cover for the costs of disposal of nuclear waste, and subsidies for new investment – in addition to getting a guaranteed minimum price for the electricity generated at double the current price. This such an economic bargain for the British taxpayer that DECC is now contemplating doing it 50 times over. This must be one of the most wasteful white elephants in history. Or a fanatical commitment to privatisation at any cost, sugar-coated with almost limitless public subsidies.

But what this government does over nuclear it also does across the piste. Telephone companies are now refusing to expand internet or signal coverage to rural areas without public subsidies. The government caved in – they didn’t need much pushing, despite insisting they were so short of money that they had to impose the bedroom tax – and handed BT a cosy £1.2bn to install broadband infrastructure. BT however insists it will keep the new assets plus the profits arising from them.

Thames Water, the water company with the worst record in the UK for leaks, is now demanding public subsidies to pay for the new £4bn London super-sewer which has been long needed, even though they have been raking off egregious profits ever since privatisation 24 years ago. The Big Five oil companies, including BP and Shell, have made more than $1 trillion in profits in the decade to 2011, indeed making on average last year $375 million a day. But they still demand subsidies and tax breaks for drilling for oil and gas, blackmailing government by asserting that without the subsidies the drilling won’t go ahead, with ominous results for future energy supplies.

The railway industry has received more than £10bn cash in public subsidies since privatisation in 1996, but this still hasn’t led to adequate investment. In the 4 years to 2012 the private railways companies invested £1.9bn in rolling stock, compared to £3.2bn in the 4 pre-privatisation years to 1993, the least productive years under public ownership. At the same time, despite the railway companies declaring £504m profits in the 4 years to 2011 of which 90% went in dividends, train fares have risen 6 times faster than average wages and UK rail fares are double the price of equivalent day return and season tickets in France and Germany. Nor will lucrative gas, electricity, nuclear or water companies consider alternative sources or safer practices without public subsidies.

Privatisation has proved a colossal scandal. It’s time the Labour party started shouting about the iniquities of privatisation across the board – the poor service, the greater expense to the public, the lack of accountability, the ineffectiveness of competition, the higher costs in public subsidies, the preference for huge bonuses for senior management and big dividends for shareholders over needed investment, etc. – and made clear that continued failure will lead to a return to public ownership.

3 Comments

  1. Chris Cook says:

    Assets may be held in common between the public who use the assets and those who operate the assets. There is a simple funding mechanism for productive assets held in common which pre-dates modern capitalism.

    This solution consists of £1.00 units of prepaid revenues sold at a discount eg to pension funds. UK sovereigns funded themselves with prepaid taxation for 600 years until the banking system arrived.

  2. Robert Palgrave says:

    Don’t forget the carbon!

    Long before the ten, or possibly 50, nuclear power stations are built, the UK will be well on the way to breaking its legal obligation under the Climate Change Act to be on a trajectory to cut carbon emissions by 80% in 2050.

    Like Thames Water failing to address leakage, the energy companies do whatever they can to minimise payments they are obligated to make to improve the energy efficiency of buildings. They also continue to burn coal – the most polluting and carbon intense fuel – in power stations because there is a glut and prices are cheap.

    Improving energy efficiency and reducing carbon emissions is too important to be left to the free market.

  3. treborc says:

    How many power station did labour build, how did labour deal with the power shortage, we went green, how much of that ended up with private profits with companies and land owners or the royals getting money from building off shore.

    I will not condemn the tories for doing something.

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