Wednesday 6 June 2018

Choosing low productivity?

By apparently preparing to announce its decisions on Wylfa B and the Swansea Tidal Lagoon in the same week, the government has put the two schemes into a direct and wholly inappropriate competition for support.  And they seem determined to come down on what is for me the ‘wrong’ side of that comparison by supporting Wylfa B and rejecting the lagoon scheme.
The financial viability of Wylfa B at the agreed price for the electricity depends on the assumption that the price is sufficient to allow the companies concerned to build and run the plant for some 30 years and then decommission it over a period of some decades and manage the waste in some currently undetermined fashion for the indefinite future, all at no further cost to the public purse.  I simply don’t find this in the least credible; it’s not the way that capitalism works.  A much more likely scenario is that the essentially unknown costs of future decommissioning and waste management will fall back on the government of the day – building Wylfa B creates a huge liability for the future.  That would be a problem for a country the size of the UK; it would be crippling for a future independent Wales.  Wylfa B fails the financial test, let alone the other problems associated with nuclear power.
Nevertheless, the flawed cost figures, built on such a wholly unrealistic assumption, seem to be the main basis on which the government is taking its decisions.  There are risks associated with both schemes, of course.  But the size and near certainty of the financial risk from Wylfa B dwarfs the potential risk from the lagoon scheme; it’s just being ignored.
There was, though, another part of what the Secretary of State said yesterday which attracted my attention, when he referred to the difference in the numbers of jobs created by the two schemes.  Specifically, he said "We are also looking at nuclear provision in Wales that would create 10 times more jobs in construction and more than a thousand extra during operation”.  I suspect that it’s a reasonably accurate conclusion; indeed, it may be an underestimate: he could have gone further and talked about the hundreds of jobs which will be required well into the future for decommissioning and waste management.
I wonder, though, whether he fully understands the economic implications of what he is saying here.  I can understand why any minister wants to be able to point at all the wonderful jobs (s)he has helped to ‘create’; but if we compare any two schemes with broadly similar outputs (whether in terms of KwH, numbers of widgets produced, or whatever), deliberately choosing the one which employs the largest number of people is tantamount to deliberately choosing the scheme with the lowest productivity.  I don’t have any problem with that as an approach; creating full employment is surely an admirable economic objective, and more important for me than maximising the efficiency of individual activities at the cost of reducing the overall size of the workforce, which is the likely outcome of increased automation.  I’m somewhat amazed, though, to see it coming from a minister in a Tory government which is generally obsessed with reducing the size of its own workforce in the interests of ‘efficiency’.
I can think of plenty of other opportunities for employing more people to achieve a specific output, but I somehow don’t see the government supporting them.  Somehow I think it unlikely that this is the start of a new trend. 

1 comment:

dafis said...

by now you should not be amazed by the apparent contradictions in any statement by a Tory minister whether it's Cairns or other other clown of the day , Grayling. Whether the Swansea Bay project washes its face as a generator of clean energy is but one dimension of the project. It also has other aspects, such as the leisure provision, which are being treated as bunce, if at all. Also has anybody gone to the trouble of adding up the total energy outputs, real and potential,being earmarked for Wales ? Such an exercise might dictate that Wylfa is not necessary when assessed on a "Wales only" aggregate basis, and it doesn't have secondary dimensions such as leisure/ amenity value.
However the Westminster regime seems wedded to the notion that seriously big ticket projects are essential. Is this a symptom of some kind of quest for post Brexit virility symbols. Hence the big spend for marginal gains epitomised by HS2,Crossrail and the biggest of them all, Trident. So there you have it. A government that is happy to fund all that nonsense is unwilling to invest in a project that can influence future thinking on clean energy infrastructure while yielding leisure and recreational benefits as a tangible spin-off. Serious deficits all round in that Cabinet.