Hinkley Point Nuclear Power Plant Edges Closer With £2bn Government Guarantee And Chinese Investment

Chancellor George Osborne is pressing for greater Chinese investment in British infrastructure as the government announced it would pay £2 billion to underwrite the proposed nuclear plant at Hinkley Point, which is due to be built partly with Chinese money.

Osborne, who is co-chairing the seventh economic and financial dialogue between the two countries in Beijing, has vowed to use his five-day visit to show that the UK is the east Asian giant's "best partner in the West". The potential for further Chinese investment in projects like power stations and high-speed rail links is thought certain to feature in the talks, the Associated Press reported.

The Dialogue will be followed by a speech on Tuesday at Shanghai's Stock Exchange, a venue the Chancellor specifically chose in order to counter Western nervousness about China in the wake of the summer's market turmoil.

The government will pay £2 billion to underwrite the Hinkley Point nuclear plant, which activists can be seen protesting outside on the eve of the first anniversary of the Fukushima disaster

Despite a slowdown in GDP growth, wild price swings on the Shanghai market over the summer and an unexpected currency devaluation last month, Osborne gave an upbeat assessment of China's prospects and Britain's determination to continue to seek closer economic ties.

He said: "Of course there have been ups and downs.

"But in our estimation, the spillover effects - the impact of that on other financial markets - has been relatively limited.

"If you look at the broader picture in China, even if it is not growing by double digits in the way it once did, it is still creating an economy the size of the UK over the next five years, so it is a massive source of global growth going forward."

Osborne said his message to China was: "Carry on with the reform, carry on with the change you are making ...You will get big movements in the stock markets but it is important to keep your eye on the bigger picture and the bigger prize, that this period of economic reform can lay the foundations for Chinese prosperity for decades to come. We are very supportive of the economic reforms that the Chinese Government have talked about."

Announcing the initial Government guarantee for Hinkley Point C, near Bridgwater, Osborne said that new nuclear power was "essential" to ensure the lights stay on as ageing nuclear and coal plants are retired over the coming 10 years.

Hinkley Point C is expected to supply 7% of the UK's electricity needs - powering around six million homes - and create thousands of jobs in Somerset and across the UK, as well as boosting Britain's energy security, Osborne said.

The government's new infrastructure guarantee is intended to pave the way for a final investment decision later this year by French company EDF, supported by China General Nuclear Corporation and China National Nuclear Corporation.

The Treasury made clear that further amounts will potentially be available in the longer term and voiced its hope that Hinkley Point will open the door to "unprecedented" UK-Chinese collaboration on power station construction.

Energy Secretary Amber Rudd, accompanying the Chancellor on his visit to China, described new nuclear power as "a vital part of our long-term plan to provide secure, clean energy supplies that hard-working families and businesses can rely on in the decades ahead".

The guarantee was "an important step forward for the first new nuclear power station in a generation and the future of our home-grown energy supplies," she said.

EDF Energy chief executive Vincent de Rivaz said: "The Chancellor's approval of the infrastructure guarantee is a clear sign of the Government's commitment to Hinkley Point C. The Government's determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news."

But Greenpeace UK chief scientist Doug Parr dismissed the guarantee as a "PA smokescreen" to hide the reality that Hinkley Point is "bogged down in a swamp of troubles".

The GMB union welcomed the financial guarantee, but warned it should not be linked to a green light for the use of Chinese nuclear technology at Bradwell in Essex.

GMB national secretary for energy Brian Strutton, national secretary for energy at the GMB union, said: "Chinese nuclear technology is unproven and no UK government should even consider allowing it to be used in a new nuclear power station 60 miles from London. We have the technology and funding in the UK and MPs must insist that the UK Government goes ahead with that."

After his speech in Shanghai, Mr Osborne's trip takes him to little-known but fast-growing cities in China's interior, including Urumqi in the western Xinjiang province and Chengdu, in Sichuan.

The trip comes ahead of next month's state visit to the UK by President Xi Jinping, the first by a Chinese head of state to the UK for 10 years.

The UK's first nuclear plant, at Calder Hall, was connected to the grid in 1956. The last, the Sizewell B nuclear power plant, was built over 20 years ago. It was built and commissioned between 1987 and 1995 and began producing power for the national grid in February 1995.

Popular in the Community