Opinion

The Madness of Chancellor George’s begging bowl

Chancellor George Osborne flies to the North Sea on a Super Puma AS332L
Dick Winchester

They’ve gone too far this time… I mean Osborne & Co with their begging bowl in China.

While George Osborne and his chum Boris Johnson were in China doing deals on funding for England’s new French built nuclear power stations and signing off an agreement to allow China’s massive state-owned communications technology company Huawei to set up a major R&D base in England somewhere hopefully not too close to GCHQ, it was reported that a Chinese schoolgirl told them that China would be concerned if so much of their country was being sold to foreigners.

That young lady had a point.

However, the truth is that while UK banks and mortgage companies can still hand out £15billion or so per month for people to spend on overpriced property, probably creating another housing bubble in the process, it seems raising funding to build a new generation of nuclear power stations costing around the same amount is not something that interests them.

Of course, the UK Government certainly can’t afford them either. In fact, the Treasury is so used to being in such a mess that it actually got quite excited when the deficit fell last month from a whopping £12billion to a still enormous £11billion!

So, the only way Westminster was going to get these new nuclear power stations built was to develop the art of grovelling, but the only way of persuading the Chinese to help fill their begging bowl was to offer them access to UK expertise and markets.

Oh and of course a guaranteed price for their electricity that’s double what it is today. Not a bad deal for them but a rotten one for us.

As to any hopes the UK might have had that in return for this piece of financial kowtowing the Chinese might open up its market more to British products then that’s truly wishful thinking.

Decades of government strategic lunacy coupled with the appalling behaviour of the financial sector has rendered the UK essentially industrially impotent.

It simply doesn’t make any of the stuff that China needs or wants and it doesn’t look as if this will change anytime soon.

In fact, the Bank of England’s data on lending figures shows that the share of loans to manufacturers has fallen dramatically since the financial crash.

Between 1997 and 2007, manufacturing and similar business were responsible for 9.7% of all bank loans.

From 2008 to 2012 that fell to 5.9%.

That compares with the 40% of loans made to other financial institutions and the 52% that went to individuals, most of which was probably used for mortgages.

Remember those promises to rebalance the economy and to increase manufacturing? Forget it. They were winding you up.

I should also actually mention that in the case of the Huawei deal it’s rather scary that their attempts to set up an R&D operation in the US and Australia were rebuffed on security grounds.

In short, the Americans and Australians don’t trust this Chinese state-owned company not to spy on them.

I can only assume therefore that Westminster likes its companies and people being spied on or is so desperate to get this funding in place that it’s prepared to accept the risk.

I think I’m with the Americans and Australians on this one; so too is Energy’s editor JC.

But, this isn’t actually Huawei’s first venture into the UK. In 2012, this company acquired UK optical components integration specialist, CIP Technologies, from the East of England Development Agency and this idiotic Government didn’t bat an eyelid even though the transactions gave the Chinese a great deal of optical networking component expertise and access to advanced European Union R&D projects.

Now as if this wasn’t bad enough Osborne has also agreed to let Chinese banks set up branches in the UK in exchange for China granting the City the right to trade in Renminbi the Chinese currency.

So there you are folks. It’s all about keeping the City happy – again.

Although the City probably won’t be too pleased that, for the Chinese, George has waived all the capital requirements normally required of overseas banks operating here.

Of course, the main beneficiaries – before the Chinese get to build their own reactors here – are the French. The state-owned French company EDF already owns the UK’s nuclear power business and will now run these new ones as well. Its main partner is Areva the French reactor builder which is also a state-owned company.

Strangely, the UK Government’s love affair with foreign state-owned companies isn’t reflected in its domestic politics where it remains strictly opposed to any form of state ownership, as Energy’s editor warned recently.

People might say this was rank hypocrisy and they’d be right. But based on the performance of these state-owned companies and many others it would also seem that Westminster’s ideology is severely flawed.

Just to add insult to injury, French state-owned EDF has already said that it’s unlikely many UK companies will be involved in anything other than “mud shifting” because they don’t have the ability to work to the high standards required of the nuclear industry. That, of course. is also due to under investment in both skills and capacity. True to its word the first big contract has been awarded to Alsthom – also French – which will provide the steam turbines and generators.

As an aside, readers who have retained their sense of humour will find it amusing Osborne did this deal on October 21, which many will realise is Trafalgar day.

It’s a wonder that the statue of Admiral Lord Nelson, vanquisher of the French Navy, didn’t fall off its column when the news broke.

Despite this, energy secretary Ed Davey said: “A key part of our negotiation was making sure this deal helps us rebuild Britain’s nuclear industry.”

And in the House of Commons he said that the UK still had a great deal of nuclear expertise, quoting – for example – the fact that Rolls Royce was working on the development of small modular reactors.

He’s right, they are. But unfortunately that work is happening Stateside, in collaboration with a US company called NuScale Power LLC which is hoping for funding from the US Government to help commercialise its technology under the US DOE Small Reactor Development Program.

It does look though as if it has a lot of potential but pretending it’s something that’s happening in and will benefit the UK is simply dishonest.

The UK Government’s decision to jump into bed with the Chinese is a huge risk.

Just remember China is a one-party communist state with an appalling human rights record. And forget about Chinese firms respecting CSR . . . corporate social responsibility.

A couple of weeks ago, Transparency International, said that Chinese companies were the least transparent of any that it monitored. I’m not surprised given the control the state exercises over them.

There can be no disguising the fact that these three deals with the Chinese are strong evidence that over the past three or four decades the UK’s economic policy and the lack of any plausible industrial strategy have been a complete failure.

Relying on the French (and possibly others including the Chinese as time goes on) for the supply of reactors, when the UK was at one point the world leader in this technology, is symptomatic of systemic government incompetence and ideology which is not actually reserved to just one party.

Remember that it was Gordon Brown’s Labour Government that decided to sell off the UK-owned reactor builder Westinghouse to the Japanese which ironically is now bidding to build at least one of the new reactors in the government’s overall programme. They’re all as barmy as each other.

But what makes this deal with the French and the Chinese even worse is that the European Pressurised Reactor design involved still burns uranium and still produces radioactive waste which, by its own admission, Westminster hasn’t got a clue what to do with.

In short, while it may have improved safety features and be more efficient it’s still an “old fashioned” and conventional reactor.

It should be interesting then, especially for us in Scotland, that in Norway a company called Thor Energy has successfully created a reactor which uses fairly conventional technology but burns a mix of Thorium and Plutonium Oxide.

Thorium fuel is safer, a lot easier to clean up and can’t be used to produce nuclear weapons.

The UK was the first country on the planet to build a commercial nuclear reactor. That it should not just abandon that important lead but could allow itself to be overtaken by a small Scandinavian country in such a relatively short time frame is not just embarrassing but inept.

As someone who was growing up at the time when Concorde took its first flight, the glorious E-Type Jaguar was introduced and the country still had a strong industrial sector I find this all very shameful.

It’s rather like watching a train wreck in slow motion except I really can’t see when or where it’s going to stop.

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