Britain goes nuclear
It has been, perhaps, a good week to hide unpopular news. At the start of the week the establishment media was naval-gazing over whether it was right or wrong that an older man should use his power and influence to solicit sexual favours from a vulnerable teenager. By mid-week, we were on to the unexpected fall in the UK inflation rate, and campaigning was in full flow ahead of yesterday’s three by-elections. And so, it was as good a time as any for the government to restate what has been blindingly obvious to anyone paying attention, that the future of the UK’s energy is going to have to be nuclear.
Five years ago, following the review of energy policy by Professor Dieter Helm, the then energy minister, Greg Clarke arrived at the same conclusion. As I wrote at the time:
“There is no combination of supposedly green technologies that can keep the lights on and reduce carbon emissions without triggering the kind of people’s revolt that no post-Brexit politician could hope to survive. Helm retreated into the last refuge of all economists: more research. Since no current energy configuration will allow business as usual to continue, some new, yet-to-be-invented technology will have to be plucked out of thin air by clever people somewhere else.
“Clarke responded with a multi-million-pound research prize for anyone who could come up with a battery that can (without randomly exploding) store enough energy to balance the intermittency of wind and solar power. The other winner from the review’s call for more research was so-called fourth generation nuclear. Even before the review had officially published, there were reports that new nuclear would be treated favourably.
“With the North Sea in steep decline since 1999, fracking too expensive, and renewables too intermittent, it was inevitable that sooner or later the government would be obliged to go down the nuclear route…
“The only vaguely ‘conventional’ nuclear project in this scheme is the promised ‘small modular reactor’ – a scaled down version generating around300MW that can be manufactured and fuelled in a factory; with standardised components theoretically driving costs down to more affordable levels. An even smaller mini-reactor providing 4MW or 750oC of heat is also being proposed.”
This week’s announcement by Energy Security Secretary Grant Shapps, leans heavily on small modular reactors, since these are essentially tried and tested submarine reactors reconfigured for use on land. There are though, at least two so-called “fourth-generation” reactors being funded – an Advanced Modular Reactor designed to operate at low-pressure/high-temperature, and a molten salt reactor similar to – although less advanced than – the reactor China claims to have developed (the UK version is only intended to be fuelled with uranium dissolved into a medium of molten salt, whereas the Chinese claim to have developed an additional molten salt “blanket” surrounding the reactor which uses spare neutrons from the reactor to convert thorium into uranium 233 – a fuel which has not been used in a reactor before). Either way, the key benefits of the molten salt reactors is that they operate at low-pressure (no Chernobyl/Fukushima-style explosions), and they can be powered with the mountain of nuclear waste that we have already accumulated.
If successful, the move would certainly mitigate the UK’s growing energy-security crisis, and in the long-term would be far more cost-effective than intermittent wind and solar. However, with Britain facing a major economic downturn, and given its track record of projects coming in well over-budget and years if not decades behind schedule, what new nuclear is developed is unlikely to make up for the capacity being lost as old coal, nuclear and gas power plants are being closed… Maybe we’d be better off just paying the Chinese to build them for us.
Establishment media pundits remain baffled as to why UK inflation is stubbornly high, despite a large fall in fuel and food prices in June. For example, Daniel Thomas, Faisal Islam and Dharshini David at the BBC reported this week:
“Falling fuel prices contributed to the slowdown in June, while food prices are rising less quickly, according to the Office for National Statistics (ONS) which publishes the figures.
“However, the UK’s inflation rate remains almost four times higher than the Bank’s official 2% target – and far above other developed countries. In the US, inflation is 3%, and in the eurozone it is 5.5%.”
We should discount the comparison with the USA, because of the Biden administration’s irresponsible use of the USA’s strategic petroleum reserve to hold down fuel prices. As Robert Rapier at Forbes explains:
“On March 31, 2022 — in an attempt to fight higher oil and gasoline prices — President Biden announced the release of one million barrels of crude oil a day for six months from the SPR.
“I remember when I first heard about it, I thought ‘Wow. That’s a lot.’ In fact, I noted in interviews at the time that this level of release would likely help stem oil prices — at the risk of depleting our insurance policy in case of a supply disruption…
“Of course, if for some reason we had a true supply emergency and found ourselves needing that oil, it would be looked upon as a terrible decision.”
The UK has nothing like the petroleum reserves held in the USA since the oil shocks of the 1970s. And so, when oil prices began to spike when the economy unlocked in 2021, there was little the government could do to mitigate the pain. Indeed, adding to the problem in 2022, the government chose to sanction Russian fuel supplies – a particular problem for the UK because George Osbourne had offshored the UK’s diesel refining to Russia in 2015.
It seems clear that the current UK inflation is a combination of excess currency creation during the pandemic – the equivalent of some £5,350 per household – which created pent-up spending when the discretionary sectors of the economy unlocked, together with the impact of rising oil prices – and energy prices more generally – which multiplied across the economy as the cost of everything made from, made with, powered by, or transported using oil rose accordingly.
Across Europe, the impact of those energy cost increases is now causing inflation to fall rapidly, and questions are being raised about whether the European Central Bank has gone too far with its rate rises. The danger is that disinflation – a slowing rate of price increases – will give way to deflation – falling prices – if the central bank continues to raise rates without pausing for the economy to catch up.
This, of course, is a much bigger risk here in the UK because, while the government did not have a strategic petroleum reserve to draw on, faced with the threat of a massive energy non-payment campaign – and the impact that would have on the private energy companies – the government stepped in and paid for everyone’s essential electricity and gas consumption, at a cost of £39.3bn. And while the government expects (don’t hold your breath) to recover £26bn of that via a windfall tax on the energy companies, from an inflation standpoint, that’s £39.3bn of additional consumer spending which our European counterparts were obliged to spend on keeping warm last winter.
This massive bung – which the establishment media has conveniently memory holed – is at least partially responsible for UK inflation remaining high into the second quarter. However, the big shock is just beginning, because most UK households have been shielded from the impact of rate rises as mortgages are fixed for two or three years. Over the next six months, more than a million mortgages which were fixed when the interest rate was at 0.1 percent, will flip over to a standard variable rate of more than 6 percent – and households will be in the unenviable position of having to gamble between remortgaging at that high rate – assuming they can find a lender – or hoping – as the bond markets are indicating – that a big recession will force rates back down again in the near future.
The UK government’s cack-handed mismanagement of the economy is largely responsible for the Tories 2-1 by-election loss yesterday too. After all, Rishi Sunak’s decision – when he was Chancellor – to spend currency like a drunken sailor during the lockdowns was the initial cause of inflation when the economy finally reopened. And just because that initial cause has been overtaken by the impacts of rising energy prices, broken supply chains, and a raft of self-destructive sanctions, does not absolve the government from running fiscal policies – like paying for everyone’s essential winter energy – which are diametrically at odds with the monetary policy which the somnambulant Bank of England finally began to implement… if the aim is to create currency to shelter households from the worst of the cost-of-living crisis, then the Bank of England should be reined-in and told to cut rates. But if the aim is to lower the currency in circulation in order to force prices down, then the government should stop throwing new currency around. As one disgruntled Tory minister, responding to yesterday’s by-election defeats, put it:
“The eye-watering swings against us in Selby and Somerton show there needs to be a complete change of direction. We should be cutting taxes, reducing the size of government, reining in Whitehall and delaying (the transition to) net zero (emissions)…”
Net zero, in the form of London’s ultra-low emissions zone (ULEZ) scheme was the one thing which saved the Tories from being the first government since 1964 to lose three seats in a single day. Although more of a revenue-raising measure than a genuine attempt at lowering emissions, ULEZ imposes a £12.50 per day charge for anyone driving within the zone. This is a particular issue in outer-London areas like Uxbridge – where the Tories narrowly held the seat – because sky-high housing costs have priced most ordinary working people out of the centre, leaving them with a choice between costly and overcrowded public transport or driving as the only means of getting to work. And unlike the laptop classes who discovered home working during lockdown, these – often essential – workers have little choice than to pay-up.
While not quite the French gilets jaunes revolt – which was also triggered by emissions policies disproportionally aimed at the lowest paid workers – Labour’s failure to win in Uxbridge – the kind of seat it must overturn if it is to win a majority next year – points to the softness of Labour’s big opinion poll lead.
It is one thing to overturn a Tory majority – even a massive one like Selby and Ainsty – in a by-election where little is at stake and people can vote tactically as a protest against the incumbent government. But in a general election, campaign resources will be spread thin, and voters will have to think harder about the issues facing the country for the future. And for the moment, it is far from clear what, exactly, a Labour government is going to do to deal with what is likely to become an economic situation on a par with the depression of the early 1980s.
Since it is hard to see the Tories turning this around in the months before the next election, a Labour government in 2024 looks likely. But with the Tories still holding a huge majority in parliament, there is still plenty of scope for a cautious Labour leadership to snatch defeat from the jaws of victory by endorsing too many policies which add too much additional cost to hard-pressed households.
One difficulty for Labour is that once the gloves come off and the election campaigning begins, the Tories will be keen to remind voters that Labour wanted to do more of all of the policies – lockdowns, furlough payments, support with energy and food prices, and sanctions on Russia – which triggered the cost-of-living crisis in the first place. Moreover, there is little sign of a serious alternative economic policy aimed at recovery. This points to a far weaker lead than the headline opinion polls suggest.
Another (neoliberal) class warrior
In my recent video, I referred to them as “professional gobshites with no clue as to how to get anything done.” They are the new cultural elite or, as I put it in my last book, the fake meritechnocracy:
“With the expansion of education, and a far larger pool of graduates to choose from, organisations in the cultural and political heights of the economy were able to introduce retrogressive unpaid internships as the first rung on the career ladder. In practice, this meant that only those graduates whose parents were affluent enough to pay their expenses for a year could get on the career ladder… or at least get a head start. The next rung on the ladder might be open for applications from non-interns, but only an imbecile would believe that a known, tried and tested intern would not fare better.”
And so, Parliament came to be dominated by graduates from Oxford University who had interned and then worked as special advisors to other MPs before doing their stint as by-election candidates and then being gifted a safe seat so long as they continued to brown-nose the party leadership.
Labour’s newest MP, the 25-year-old Keir Mather is a walking model of this new technocratic “class for itself.” A politics and history graduate from Oxford University, Mather worked as a parliamentary researcher for Shadow Health Secretary Wes Streeting, before doing a stint as a senior (how the fcuk does anyone get to be “senior” at anything before they reach 25?) public affairs advisor for the Confederation of British Industry.
It is a sad fact that while Labour continues to self-identify as the party of the working class, following the 2019 demolition of the red wall, it is the Tory party which fields the most working-class MPs. Although, sadly, with Labour well ahead in the polls, most of these will be defeated next year. And with Labour fielding metropolitan neoliberals like Mather, the fake meritechnocracy is likely to extend its grasp on Parliament after the next election – although Mather is unlikely to remain an MP, since his seat will likely swing back to the Tories in the general election.
Social cohesion is the real loser though, as the political class (across all parties) is almost another species compared to the ordinary working people who elect them. It is all too reminiscent of the passage in Douglas Adams’ So Long, and Thanks for all the Fish, when an alien arrives on Earth and says:
“I come in peace. Take me to your lizard…
“It comes from a very ancient democracy, you see…”
“You mean, it comes from a world of lizards?”
“No,” said Ford, who by this time was a little more rational and coherent than he had been, having finally had the coffee forced down him, “nothing so simple. Nothing anything like so straightforward. On its world, the people are people. The leaders are lizards. The people hate the lizards and the lizards rule the people.”
“Odd,” said Arthur, “I thought you said it was a democracy.”
“I did,” said Ford. “It is.”
“So,” said Arthur, hoping he wasn’t sounding ridiculously obtuse, “why don’t people get rid of the lizards?”
“It honestly doesn’t occur to them,” said Ford. “They’ve all got the vote, so they all pretty much assume that the government they’ve voted in more or less approximates to the government they want.”
“You mean they actually vote for the lizards?”
“Oh yes,” said Ford with a shrug, “of course.”
“But,” said Arthur, going for the big one again, “why?”
“Because if they didn’t vote for a lizard,” said Ford, “the wrong lizard might get in…”
As you made it to the end…
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