Ardent criticism is coming from all factions of parliament on the government’s handling of the energy crisis and with household energy bills possibly topping £5000 next year, this is very much a crisis. However, some of this criticism is misdirected to say the least. Parts of the Labour Party, in the form of the befuddled Diane Abbott, and the now seemingly-perceived demigod figure of ex-prime minister Gordon Brown have called for the nationalisation of energy industries, citing the success of the French in this area. Meanwhile, the Liberal Democrats desire an increase in benefits to help households make ends meet this winter. All criticism is accompanied with undercurrents of contempt (seldom implicit) for the profiteering private sector energy companies. However, there has been no exposure, from any side of parliament, of the abject failure of successive governments to improve the anachronistic and unduly regulated energy industry over the past twenty years.
Specifically, the nuclear industry has been left in an infantile state. Proponents of nuclear energy have long claimed it to be environmentally friendly, efficient and cheap. The main frame of energy policy was laid out in the 2008 Energy Act (under the Brown government) which the World Nuclear Association labelled as being “largely built around reducing carbon dioxide emissions rather than security of supply or cost.” The potential of nuclear energy has therefore been neglected, with preference on more ‘green’ initiatives. There are now just 9 reactors in the country, producing a miserly 15 per cent of our total electricity, down from 25 per cent in the 1990s.
Meanwhile, those across the Channel are sitting rather smug, with French energy prices only rising by 4 per cent since the war in Ukraine began. Comparatively, they have unleashed the potential of nuclear energy since the 1970s, with fifty-six reactors producing 70 per cent of their electricity and crucially allowing them to be net exporters of energy, reducing their reliance on the unpredictable Russian dictatorship. France also has a rich history of energy economists, with institutions such as the Sorbonne training the likes of Maurice Allais, who fastidiously analysed their energy industry in the 1970s, the time when plans for nuclear infrastructure were first incepted in France. No such prescient focus exists in the UK, and this teamed with a lack of investment have left us in an exposed position where bills are rising faster now than they have in the last fifty years. Some may say that this has only been possible in France due to public ownership, but the UK government currently offers a “contract for difference” to those building the plants, which gives companies a guaranteed ‘strike price’ for energy produced for the first thirty-five years of the life of a plant. Thus, this presents a situation akin to what John Maynard Keynes labelled as ‘the socialisation of investment’ (which he argued was more effective than full blown state ownership of the utilities). However, this policy has only been recently imposed by the government, proving the problem was borne through neglect further back.
So, when you hear commentators lamenting on the issue and calling for an increase in benefits (though it is true that this may shield us from the worst this winter), remember that the causes go further back than the simplistic explanation of the war in Ukraine. And when you inevitably curse over your next grotesque energy bill, think of our friends in France scoffing at our stupidity, and the one or two things our policy makers could learn from them.