The Chancellor is facing the usual litany of demands from business ahead of this week’s Budget, but there is one issue which is probably of greater significance for the future of the British economy that any other – energy.
This country’s energy policy is a shambles.
The cases of Hinkley Point nuclear power plant and the Drax coal and wood burning plant between them demonstrate the extraordinary mess we are in.
It is not a mess uniquely created by our current Government, nor the Coalition which preceded it. Instead, it is the result of several decades of short-term politically driven policies and often public posturing by politicians of all stripes.
Industrial battles over our coal industry; controversy over the safety of nuclear energy; and, in more recent years, the injection of environmental gesture politics have created a chaotic situation.
I blame accounting – both of the financial and the environmental variety.
And these are not side issues: Drax provides about 8 per cent of the UK’s electricity. Hinkley Point is planned to produce a similar proportion.
The Drax case shows starkly how the system of ‘carbon accounting’ is a nonsense – or, at the very least, open to the kind of subjective accounting methods we usually associate with advanced tax avoidance.
It is the result of a futile attempt to reduce the question of carbon emissions to a kind of book-keeping. Then there is Hinkley Point. The deal with the French group EDF, backed by China, to build two reactors in Somerset was negotiated at a hugely expensive price.
Under the deal, Britain is guaranteeing to buy electricity from Hinkley at twice the current market rate.
Defenders, such as former Energy Secretary Sir Ed Davey, insist that this is a sound deal not least because it includes the full costs of cleaning up and decommissioning the plants in the future.
That may be true. But it has now emerged that EDF itself has doubts about whether it can afford the risk involved in building the plant.