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Alistair Darling: HS2's problems, UK's north-south divide and the cost of Hinkley Point C

Exclusive: Former chancellor Alistair Darling has said the government should look at publicly funding new nuclear after the “expensive deal” agreed for Hinkley Point C.

Mr Darling, who as industry secretary announced the go-ahead for a new wave of UK nuclear plants in 2006, said he was in favour of the government “getting as much private money as it can” but questioned whether it would be preferable for the state to fund new power stations.

In 2006, Mr Darling said “it would be for the private sector to initiate, fund, construct and operate new nuclear plants and cover the costs of decommissioning and their full share of long-term waste management costs”.

“You need to ask yourself would it be better for the state to do it as opposed to what looks like quite an expensive deal?”

Alistair Darling on Hinkley Point C

But he told Construction News that although “conventional wisdom up until now has been that the private sector should build all power stations including nuclear”, there had been a “sea change in political opinion” on that and that his message to government was “don’t avoid the state alternative”.

He said: “I am very much in favour of something like a power station getting as much private money as it can; the point I am making though is that you need to be sure that at the end of the day it is value for money.

“What we have done here is we are guaranteeing part of the construction costs and [have] passed them down the line; it will be the next generation that pay for these very high wholesale prices of electricity and the point is, you need to ask yourself would it be better for the state to do it as opposed to what looks like quite an expensive deal?”

A strike price was agreed between EDF Energy and the Department of Energy and Climate Change last week for the power generated from 2023 at the proposed Hinkley Point C new nuclear plant.

The price has been criticised for being almost twice the current wholesale cost of electricity, and will kick in from 2023 when the plant is expected to start generating power.

“You are bound to be looking at what you can afford to do and to set out your stall ahead of any election”

Alistair Darling on Labour policy

French and Chinese investors have been brought on board to help foot the £16bn cost of the development, while the Treasury will provide a UK Guarantee for its construction, as revealed by Construction News in February.

Mr Darling spoke at the inaugural Construction News Summit on Thursday, where he also reiterated his concerns over the High Speed 2 project.

He said that further upgrades to services on the West Coast, East Coast and Great Western Main Lines, as well as London commuter services would all be needed and that his fear was that “money will be sucked out of all of these projects into building a railway line, for which the case is not made out”.

Asked by Construction News whether Labour was contributing to political inertia over infrastructure by pledging to review schemes including the Green Deal, HS2 and Help to Buy, Mr Darling insisted Ed Balls was “entirely sensible to be cautious”.

He said: “I’m on the backbenches now, but for any opposition party where there is so much uncertainty on these things, you are bound to be looking at what you can afford to do and to set out your stall [18] months ahead of any election.

“There’s a broader issue though. It would be nice to get cross-party political consensus on things like: what are we going to do with the railways over the next 30 years? What about the airports? Are we sure this is the right way to fund nuclear?

“If you look at England outside the South-east, the government has got a big problem because it is increasingly becoming a two-tier environment”

Alistair Darling on the North-South divide

“All these things would help political parties put their thoughts together. I think it’s entirely sensible for him, particularly as an incoming chancellor, to be cautious about ‘well can we afford this £50bn’ or if we are going to spend it and if the argument is economic regeneration how come it won’t come to the North of England for another 30 years?”

Mr Darling said he was unaware of any party whip on the upcoming hybrid bill, due to be presented to parliament on 25 November, but that if there was one, he would “look very carefully at it”.

On incoming HS2 chairman Sir David Higgins’ comments that he wanted to examine the case for building later phases from the North down, Mr Darling said: “I’m with him in his sentiment, it’s a sensible thing for him to be saying, but I do think that the question is whether we should be embarking on a high-speed network; [if it] is a good thing or not.

“It probably was [a good thing] in the 1980s but I just wonder with the internet and other things if you can still put the same premium on people moving around at high speed. It’s nice, it’s comfortable, but the economic argument is a bit thin.”

Sir David Higgins told the House of Commons transport select committee this month that HS2 should consider building from the North to the South as well as the current build plan, which runs the opposite way, and should look at speeding up the second phase of the scheme.

Sir David said: “I think if you are in the North you would want to see the benefits earlier. I do not think people want to wait until 2032 to 2035 to see the benefits and that is something I will look closely at.”

But Mr Darling said: “[That] doesn’t get away from querying whether we should build a high-speed link. If you look at England outside the South-east, the government has got a big problem because it is increasingly becoming a two-tier environment.

“There is a very powerful argument for looking at the transport links… connections between the big English city regions, or links between the Midlands, North of England and the [Port of Felixstowe].

“I would be much happier if money was being spent on those than frankly a link that might speed up the time it takes to get to Birmingham from London, but equally might get Birmingham jobs moving to London.

“There is a lot of evidence now that the more we improve railway lines within 100 miles of London, more people come into London than the other way around.”

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