The Infrastructure and Projects Authority has kindly brought us up to speed with the government’s major projects portfolio, worth a handy £455bn. The annual report is a cheery, upbeat document, with encouraging examples of things that are going well, like the Super Connected Cities Programme (who knew?). It’s not until you reach the pretty colour-coded summary of all the projects that the uncomfortable truth emerges.

The authority shades these from dark green (textbook) through green (OK) to amber (significant problems) amber/red (it’s all going wrong) and red (no realistic chance of success). Few projects are red. They include new reactor cores for nuclear submarines, the perennial problem of the A303 at Stonehenge, and the M20 lorry area.

None of these moves the dial on public spending. One that does in the amber/red category is the HS2 rail link, that vanity project to connect Birmingham faster for the few at the expense of the many. It’s particularly rich that the authority’s latest verdict should coincide with transport secretary Chris Grayling scrapping three modest rail electrification plans (all also amber/red). As Private Eye has been warning for years, Network Rail never had a hope of meeting its commitments, so Mr Grayling is punishing it by restricting the state-backed company to maintenance rather than capital projects.

The money sink that is HS2 goes ahead, apparently, despite generous payoffs to executives before a rail sleeper has been laid. Should this project obey the definition of a builder’s estimate – a sum equal to half the final cost – as one rail expert expects, the bill will be over £100bn.

Surely not, says Mr Grayling, just look at the London Olympics, which shows that at least the transport secretary has a sense of humour. The final cost there was almost four times the initial estimate. The award of a major HS2 construction contract to Carillion, a company whose liabilities exceed its assets, suggests ominously that if the company’s bondholders do not rescue it, the taxpayer will.

Then there is Hinkley Point. Did you know that it’s all going swimmingly? It’s rated dark green, meaning “Successful delivery of the project on time, budget and quality appears highly likely.” This is the nuclear power station that nobody wants, and the subject of (another) damning report from the National Audit Office.

Hinkley Point promises financial misery for the owner, the contractors and finally to every British business and household through higher costs for electricity. The owner, EDF of France, is in poor shape financially and struggling to make its home-built prototype comply with escalating safety regulations. It has just added two years and £1.5bn to the estimated Hinkley start-up date.

Britain’s nuclear policy dates back to 2008, an age when the oil price was only going to rise. Nine years on, the world has changed. The combination of abundant oil and gas and rising regulatory costs have sounded the death knell for big nuclear fission plants.

The NAO now estimates the Hinkley Point subsidy at £60bn, locking Britain into high energy costs at a time of world abundance, with a devastating impact on competitiveness. The calculation, on the government’s estimates of fossil fuel prices, that a three year delay will actually save consumers money is a demonstration of how barmy this whole fiasco has become.

Thanks to the sleight-of-hand, otherwise known as a “contract for differences” with EDF, this financially radioactive project does not appear as a liability in the public accounts. The pain will appear in electricity bills. It’s a pretty brutal way to persuade us to use less energy.

 

 

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