Nuclear power for Britain, yes; ineptitude and lies, no

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Britain should have a new nuclear power programme, but one which represents the clearest possible break with the past. The structure should be simple, transparent, and have clear lines of ultimate responsibility to the consumers and taxpayers who will ultimately pick up all the bills.

Nuclear power raises issues of safety, of power and of management. Each is more complex and more nuanced than public debate acknowledges.

The most risky activities often have the fewest accidents. You are more vulnerable to a domestic accident than a plane crash. Sitting in a heavy metal box travelling at 500mph and 35,000 feet above the ground is so obviously unsafe that enormous efforts have been made to ensure that it is very safe indeed. In the same way, the all too apparent risk that a nuclear power station might turn into a nuclear bomb has been reduced to minuscule proportions through failsafe engineering, backup systems and tight regulations.

These precautions are reassuring but not completely so. To use the terms of Donald Rumsfeld, US defence secretary, we are well protected against the known unknowns but not the unknown unknowns. The real risks from nuclear power come not from failures we have anticipated but from ones we have not. Other unrecognised contingencies give substance to our frightened intuitions.

The economics of nuclear power, however, have never seemed so favourable. Oil prices are high and real interest rates are very low. The British government can today borrow over the lifetime of a nuclear power station at a real rate of interest of little more than 1 per cent.

But calculations of the future costs of electricity are confused because the cost of raising private capital for nuclear generation is much higher. Investors demand recompense for the certainties of political interference and the uncertainties of the future price of electricity. These costs are the consequence of political and market institutions, rather than the underlying economics of the project.

The best response to long-term demographic concerns is to find projects that create goods and services which today’s workers will certainly want in retirement. The government should take the opportunity of low interest rates to refinance public debt and invest in infrastructure.

The most serious issues are those of management. The history of Britain’s nuclear industry is one of staggering ineptitude compounded with overbearing arrogance. Britain’s nuclear programme was subject to project delays of more than 10 years, cost escalations of several orders of magnitude and decommissioning bills that will burden generations to come. Nor is there much evidence that lessons have been learnt: even after the nuclear power programme was abandoned, taxpayers were subjected to the same story of delays, overruns and missed projections at the Thorp reprocessing plant. Recent submissions from nuclear lobbyists offer projections of the capital and operating costs of new plant which are substantially lower than anyone, anywhere in the world, has achieved. There is now nothing they could say that we could ever believe.

Britain should have a nuclear power programme, but one that represents the clearest possible break with the past. The management structure should be simple and have clear lines of responsibility to the consumers and taxpayers who will ultimately pick up all the bills. If they tell us that the risks of a new nuclear programme will be transferred to the private sector, they are lying again. One glance at the losses incurred on past investment in British nuclear generation reveals that there are no private sector balance sheets big enough to accommodate them. The public has been let down in the past by Eurotunnel, British Energy and Railtrack, ostensible private companies too big to fail.

There should be a new publicly owned company, without any taint of creative accounting or off-balance sheet financing. Transparency is the most important requirement. The new organisation should have the best people managing the projects and negotiating the contracts. It should have a board of the toughest, most experienced corporate executives from Britain and abroad. Britain’s best scientists and engineers are essential to the project but their role should be clearly subordinate to its commercial direction. Nuclear power is too dangerous, too costly and too important to be managed in any other way.

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