What a curious affair has been the Hinckley Point nuclear power project. Brought to a shuddering pause yesterday by the UK government, with no reason given and no apology made.
The move was “bonkers” to the GMB trade union, whose calculation the project might create 25,000 jobs convinced it that Hinckley Point C was a “good thing” for the economy. The project depends on an eye-watering subsidy currently estimated at £29 billion, to be borne by consumers.
The government has indicated an 11th-hour desire for one final look at the deal. This may be wise. Britain faces numerous strategic decisions that could make or break the economy. This results from successive industrial policy failures, and now Brexit. Just as Theresa May does not want to be rushed into triggering Section 50, the mechanism that sets off a two-year timetable to exiting the EU, she would do well not to hurry into deals like Hinckley Point.
Two Sundays ago, Mrs May and her Chancellor, Philip Hammond, took a call from Japanese entrepreneur Masayoshi Son to confirm his telecoms company Softbank was to purchase ARM Holdings – a British company with the rare ability to claim world market leadership – for £24bn. The call was simply a courtesy. The Softbank deal had been brainstormed, initiated and completed within a fortnight. Sterling’s post-Brexit fall – 30 per cent against the yen – made the company look cheap from Tokyo.
The deal was accompanied by promises ARM would retain its Cambridge base, employment there would double, and so on. Such promises mean little when push comes to shove. ARM employs 4,000, and it would be difficult to find another 4,000 like them, given the high skills employed, and a very international workforce.
Sold in their billions, ARM-designed chips are in virtually every major consumer device such as the iPhone. The Japanese firm wants Softbank to effectively ”own” the next-generation platform for the “Internet of things”, via ARM. It is hard to imagine France, the US or Japan allowing a similar business to fall so easily into foreign ownership. ARM founder Hermann Hauser lamented an “unintended consequence” of Brexit and the loss of future corporate strategy to Tokyo.
In another epoch, ARM’s succumbing to a deal like this would have been seen as an industrial disaster. Instead it was spun somehow as proof that post-Brexit Britain is “open for business”. Yes, but what kind of business and open to whom?
Which brings us back to Hinckley Point. This £18bn power station would be led by the heavily-indebted French state energy company EDF, but around a third of its funding will come from China, which may well be what troubles Mrs May.
China is a potential military threat and reputedly the source of malicious hacking interference in Western industry and government. Nicola Sturgeon was questioned simply for signing an agreement to discuss investment partnerships in public infrastructure. Last week the city of Sheffield went much further by agreeing a 60-year construction deal which is likely to attract sceptical attention once its details are actually known.
The screeching halt to Hinckley Point may be a signal that a few pennies have dropped in Downing Street. Perhaps too late for much of British industry.
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