Why is everyone shouting that the nuclear deal is so expensive?

I have to admit that I'm not really getting all this screaming about how expensive the nuclear deal is. Just not getting it at all:

Seven years ago, I collected all the available cost estimates for nuclear power. The US Nuclear Energy Institute suggested a penny a kilowatt hour. The Royal Academy of Engineering confidently predicted 2.3p. The British government announced that in 2020 the price would be between 3 and 4p. The New Economics Foundation guessed that it could be anywhere between 3.4 and 8.3p; 8.3 pence was so far beyond what anyone else forecast that I treated it as scarcely credible. It falls a penny short of the price now agreed by the British government.

And there's any number of people out there shouting that at £92 per MWhr Ed Davey has agreed to pay twice the current price for the electricity that will be generated. Or, as George Monbiot points out above, that 9.2 p or so per kWhr.

Sure, this is indeed more expensive than the current costs of electricity but here's the bit that I'm not getting. These complaints, they're over something that is vastly cheaper than all of the other things that are being done with the full agreement of those currently complaining.

This strike price, it's the same as a feed in tariff in its effects. And here's the list of the feed in tarifs on other technologies. Solar at 14.9 p, Hydro at 21.65 p, wind at 21.65 p again. This nuclear scheme, the one that people are complaining so hard about, is under half the cost of wind power. So, either nuclear is amazingly cheap or it's grossly expensive and wind power is twice as bad either way around.

So, as I say, I don't really get it. How can people complain about the costs of this nuclear deal and then go on to support alternative technoligies which are twice as expensive?

Summary

Institutionalised abuse of whistleblowers

A few weeks back I wrote about the criteria used by the Care Quality Commission (CQC) for inspecting dentists and their complete irrelevance to patient experience and assessing tooth maintenance.  The CQC inspectors do not see what matters and if they do see evil, they do not correct it.  Three brass monkeys preside over the CQC boardroom table: Speak no evil, hear no evil and CQC.

The Orchid View Care Centre is the latest example. According to this week’s reports Orchid View was opened in 2009 and by 2010, when the CQC first inspected, abuse was already rampant.  The CQC did find fault in 2011 but then took no steps to deal with the malefactors before the Care Centre closed four months later.  19 residents died in these two years and the coroner attributed five of the deaths to neglect.

As well as the residents and patients, the whistleblowers in care homes and NHS facilities also suffer from institutional abuse. That needs urgent attention too.  Andrea Sutcliffe, CQC Chief inspector of adult social care, was interviewed on the Today programme on Saturday about the Orchid View case. She was asked if she thought it unfair that the whistleblower, Lisa Martin, not only had to endure all the stresses of whistleblowing and its workplace consequences but had been unable to find a job in the three years since.  Sutcliffe agreed that it was unfair.

She was asked what should be done about that. After a pause which seemed to indicate that she had never previously considered the matter, she replied that a change of culture was required.  Unfortunately the interviewer failed to press the point.  What change? How could it be achieved? What is the CQC doing about it?

Every whistleblower in care homes and the NHS suffers the same abuse from the CQC and the other institutions involved: obstruction and putting on the frighteners to ensure nothing gets out and then, when it does, platitudes followed by a complete absence of practical help.

Lawyers and the compensation culture are part of the problem.  Managers are not allowed to admit fault, malpractice or negligence in case victims and their families sue. Funding shortage contributes to care failures in the first place and paying compensation further reduces available funding. When the facts do finally become public, not via the CQC which has its own tracks to cover, platitudes are followed by a complete lack of support. Abandoning whistleblowers to their own fate is as much an abuse as failing to tend the elderly.

Yet the CQC needs whistleblowers and should be motivating and supporting them.

Every whistleblower, whether in a care home or hospital seems to suffer the same fate: The anguish of being disloyal to workmates and employers, legal obstruction followed by joblessness.  After all, who would want to employ a troublemaker?  So who would want to be a whistleblower?

This has a simple solution.  Apart from those few cases where the whistleblower is crying wolf, the whistleblower should always be offered a job by CQC as an inspector.  Who else is better qualified for the job?  And if the CQC needs to sack some of its current dozy inspectors to make room for whistleblowers, so much the better.

Bad bank

Let us join with the evangelist’s celebration of heaven’s joy at the sinner who repenteth. Even since the financial crisis kicked in, we’ve been banging on about the government’s approach to banking regulation, variously irrelevant as the bonkers Vickers proposals, self-contradictory as schemes simultaneously to recapitalise and to promote lending (help to buy, anyone?), and generally panic-stricken throughout.

Four years ago we argued for “the formation of a bad bank and subsequent work-out, which often proves profitable”. Well at last George Osborne has got the email, a few days ago telling reporters in China that he’s asked Rothschilds to make proposals. This would pave the way for RBS to be floated, with a sale of Lloyds signalled for the off following Royal Mail and the Government’s belated rediscovery of the feel-good properties of privatisations.

The most successful example of bad banking came after the Swedish banking bubble of the early nineties. Duff assets were transferred to a couple of asset management companies which in due course sold them off, often at a profit. The Swiss took a similar approach in 2009, as did the NY Fed which created “Maiden Lane” to take over assets from Lehmans and AIG. Indeed we already have something of a bad bank in “UK Asset Resolution”, which recently sold its portfolio of Northern Rock’s dodgy loans to an American consortium including debt recovery specialists.

So why so long to apply this tried and tested approach to RBS? Maybe it’s scale: the egregious Fred Goodwin was celebrated for his commitment to buying the worst business at the top of the market. Maybe it’s politics: the rediscovered merits of privatisations mentioned above, or the prospect of the Scottish independence referendum next September. In which case, why did Osborne rule out selling a stake in RBS this side of the UK’s general election in 2015? We couldn’t say, other than to note that once sinners take up this repenting habit, it becomes far easier for them to change their minds about other errors.

Neelie Kroes has a Nancy Pelosi moment

I can't help feeling that there must be a better way to run a continent than this.

The background is that the EU Commissioner, Neelie Kroes, wants to stop the mobile telecoms firms from charging roaming fees. Well, OK, whatever. But Vodafone, one of those companies that will be affected, is arguing that this will or at least could lead to the sort of cooperation among the mobile companies that other parts of the EU will regard as collusion. A cartel even: and the EU can fine a company 10% of global turnover for indulging in something like that.

Now I have no idea whether Vodafone is correct here: but that's not my point. It's what Kroes is arguing back that is:

Ms Kroes’ advisers insist that competition regulators can only assess the impact of the laws once they are passed

I beg your pardon? We have a governance system which cannot even check whether its own proposed laws are actually legal? Do not conflict with other laws they've already passed? We're actually entirely blind as to whether a new law is even possible to implement until after we've passed it?

I submit that this just isn't the way to run acontinent. It's not even the way to run a whelk stall or a bevvy at the brewery tap.

The only other politician I've heard saying something so remarkably obtuse was Nancy Pelosi who said that the only way to deal with the Affordable Care Act (aka Obamacare) was "We have to pass the bill to find out what's in it". And the monumental cluster.... that is the roll out of the federal health care exchange over the past three weeks shows how good a method of governance that is.

Seriously, we do have Parliaments, they do have debating chambers, they're there in order to discuss laws before they're passed. Perhaps we should try this?

Chart of the week: US monthly cash balance

Summary: A shutdown is easiest in Q2

What the chart shows: The chart shows the US Federal Government monthly cash balance over the past ten years

Why is the chart important: One (of many) problems relating to the discussion about the US Federal Government debt ceiling is the monthly pattern of revenue and expenditure. The first three months of the fiscal year – October to December – tend to be deficit months. Only in January ist here usually a cash surplus. But by that time, the cumulative balance is already so deep into the red that it is impossible to catch up. It also means that government spending is quickly hit by the need to restrict expenditures to revenues. With the recent agreement on the debt ceiling, the US government is functioning until February next year. At that stage, there may be a further cliff-hanger of shutdowns and debt ceiling threats – or there may not. But from a government perspective, calendar Q2 is easier to deal with than calendar Q4 or Q1, since revenues tend to exceed expenditures for a brief period.

Markets are solving the food waste problem

Tesco, one of Britain's largest supermarkets, has revealed that it threw out 30,000 tonnes of food in the last six months. Customers throw out yet more. Appalling waste caused by the 'pile it high, sell it cheap' capitalist ethic?

Nobody likes waste, particularly those of us in the baby boom generation whose parents had lived through wartime rationing – or those who are old enough to remember it personally. We were brought up with the mantra 'waste not, want not'. Supermarket bosses are no different from the rest of us in that respect, but they have another powerful motive to avoid waste too: it is very bad for the bottom line. Why pay producers for food that goes unsold?

That is why Tesco has actually done a survey of what customers actually ditch, going through 10,000 dustbins in their research (ugh!). It seems that 65% of bagged salad is discarded, for example. The result of that? Probably, smaller bags being put on sale from now on. And clearer instructions on food packaging about how to keep it fresh.

There are many other reasons why so much food is wasted, though. In most cases it cannot be put into pig swill any more, because of the risk of animal diseases that might affect humans, though a bit goes to local zoos. Then there is the absurd 'best by' and 'sell by' labelling – you can blame government for that, of course.

Actually, we waste a lot less food than our wartime and postwar parents did. My mother's dustbin used to be full of potato peelings and the outer garbage of cabbages and other vegetables. Now, these are used and recycled and only the best bits reach our homes. Packaging too helps keep food fresh by protecting it from bruising and from the air.

The counterintuitive fact is that, thanks to capitalism, we actually have a system that produces food so efficiently that we don't actually mind throwing it out if it looks and tastes a bit elderly. If only we could spread this production system to other places in the world where food is scarce and expensive because it is not produced efficiently at all. Again, you can blame governments in those countries for resisting the market economy, and out own EU authorities for trying to protect their own famers behind trade walls, for that crime – not a crime against food, but against humanity.

Marinaleda, the new new socialist utopia

Hope springs eternal that there's some method of socialism that will actually work and the latest example, something which is in the words of the author here a beacon of hope to the world, is called Marinaleda. A large village of just under 3,000 souls in southern Spain where they farm the fields in common. Parts of it sound awful:

The town co-operative does not distribute profits: any surplus is reinvested to create more jobs. Everyone in the co-op earns the same salary, €47 (£40) a day for six and a half hours of work: it may not sound like a lot, but it's more than double the Spanish minimum wage....(...)...

All work in the Marinaleda co-operative in shifts, depending on what needs harvesting, and how much of it there is. If there's enough work for your group, then you will be told in advance, through the loudspeaker on the van that circles the village in the evenings. It's a strange, quasi-Soviet experience, sitting at home and hearing the van drive past announcing: "Work in the fields tomorrow for group B".

Well, yes, quasi-Soviet it does sound like. And it sounds awful to me because I'm a city boy. It would be terribly, terribly, easy to sneer at all of this. All those Islingtonistas clinging to the hope that there's an alternative to capitalism even if they'd never actually join in it themselves. And as we can see there is an absolutely and entirely viable alternative to that capitalist ownership of land even if the Islingtonistas are never going to work in the fields for £45 a day. We might even point out that the reason they don't need the capitalists is because they simply stole the land that they're farming which does tend to cut down on capital costs.

However, rather than sneering we should point out the interesting parts:

In addition to the ubiquitous olives and the oil-processing factory, they planted peppers of various kinds, artichokes, fava beans, green beans, broccoli: crops that could be processed, canned, and jarred, to justify the creation of a processing factory that provided a secondary industry back in the village, and thus more employment.

More on that employment part in a moment but note what they actually do with these packed and preserved veggies: they sell them. They may well be a workers' cooperative and good for them if that's what they want to do. But they are still plugged into the market system and as I've often pointed out, it's markets that are much more important than the capitalism part of our economic system. That there is the division and specialisation of labour along with trade in the resultant production is far more important to rising living standards than the relatively minor question of who owns the productive assets.

But there is still one thing they've got badly wrong:

"Our aim was not to create profit, but jobs," Sánchez Gordillo explained to me. This philosophy runs directly counter to the late-capitalist emphasis on "efficiency" – a word that has been elevated to almost holy status in the neoliberal lexicon, but in reality has become a shameful euphemism for the sacrifice of human dignity at the altar of share prices.

Efficiency has nothing to do with capitalism, neoliberalism or share prices: or nothing to do with them that it doesn't also have with any other method of economic organisation. You still want to have the maximum output for the inputs you have available. That's how you maximise what can be consumed of course. And this village is relatively land poor (1,200 hectares) and labour rich (2,700 people) so of course they should be using a labour intensive form of agriculture. That would be true under any economic system, assuming that the entire village is going to try to live off the land. Given the constraints they're working with any economic system would lead to the same strategy (and do note, their constraints include there not wanting to depopulate the village to move into industry elsewhere).

What we've really got here is a workers' cooperative plugged directly into the market system. And good on them and let's hope they all enjoy it. What we don't have here is some radical vision of a different society. For as we well know, the liberal order both allows and encourage different forms of organisation as the customer coops of the Building Societies and the Co Op, the workers' cooperative of John Lewis and Waitrose and the shareholder owned parts of the economy show us. Marinaleda is simply another experiment and as always happens in market based societies, those experiments that work will spread, those that don't won't. Given that most people don't want to live as 14 th century villeins I doubt this will spread: even though that won't stop some people trying to impose it on us all.

The bit that we have to be very careful about is to make sure that this socialist fantasy doesn't get transfigured as it moves from reality into that pantheon of possible utopias. They've not abolished the market, tey really are simply a workers' coop. But such is the British left's disdain for markets (so close to "trade"!) that when it gets over here they're going to be calling for the abolition of markets and that's just not what makes this village work at all.

It might not be nuclear power station costs that are the problem

We've the news that the Chinese are to be allowed to put their hard earned cash into providing us with electricity through the medium of nuclear power stations. Something that I'm just fine with I have to say: I'm absolutely delighted when other people invest their money to provide me with things I desire. But it's worth mentioning something important about all of this:

$22 billion for two EPR reactors in Europe (France and Finland) is about triple the $7.5 billion for the two Chinese EPR reactors.

It really is true that the two reactors being built in Europe are three times the price of the two being built in China. So, at first pass, we might think that getting the Chinese to build ours will be cheaper. Sadly, that is to make an error. For these are not cheaper Chinese reactors being built at all.

In fact, the important thing to note here is that this is the same reactor being built four times in different places. It would thus be more sensible to assign the cost differences to where they are being built rather than what is being built. We've even got much the same engineering companies doing and or overseeing the work in the different locations.

At which point I'd offer an hypothesis. And it's only that, not a theory, only a little more than a supposition. I see it in my own day job too. If I were to wish to build a small plant (and I do mean small, processing a few tonnes of basic material a day) here in the EU it would take me perhaps 18 months to gain the environmental licence to do that. In that same time I've seen competitors in China go from idea to full production.

No, I don't suggest that we all adopt Chinese environmental standards, not at all: but I would just like to point to the costs that such have. And I think that what we're seeing here in the nuclear costs is very much the same thing. It costs two to three times more to build a reactor in Europe as it does to build the same reactor in China. And no, labour costs are not the reason why. And the reason is the way in which we here in Europe try to regulate the building of reactors.

Or, as a certain nuclear engineer of my acquaintance is known to say, the majority of nuclear building costs are regulatory, nothing else.

Equality in death if not the time of it

New figures out from ONS means that the newspapers have an opportunity to point to the inequality of lifespan in Britain:

A baby born in the North West of England will live on average two years less than a child born in the South East, new Government figures have revealed. The figures give a snapshot of life in Britain today and reveal the divisions between life-expectancy rates for people living in different areas of Britain.

The figures themselves are correct, average life expectancy does vary around the country and across socio-economic classes. But the interpretation put on them is not correct. For no one is measuring the life expectancy of someone born in a particular place. They are measuring the age of death of people in that specific place. The error can be seen in this second story inspired by the same ONS numbers:

Eastbourne has become the first place in the country to boast a population with an average age of more than 70. The Meads district of the famously genteel East Sussex town was identified by the Office for National Statistics as having the oldest residents in England and Wales. Named by officials as Eastbourne 012B, the well-heeled area has a population with an average age of 71.1, compared with the national average of 39.7.

We do not believe that all people born in Eastbourne have exceptionally long lives. Quite the contrary, we believe that people who live long enough to move when they retire go to Eastbourne. Which of course means that people who live long enough to move when they retire must move away from some other part of the country, lowering the observed age at death in those places.

A goodly part of the inequality of lifespans is simply that people move around. And we have parts of the country where older people preferentially move to. Thus, inevitably, we end up with concentrations of the long lived in some paces and a relative paucity of them in others.

Try this for an extreme example of the same phenomenon. Measure the average age of death in a children's hospice against that in a home for those with senile dementia. We will see a very great difference in average life span, a vast inequality. One that will tell us absolutely nothing at all about the average life expectancy of those people when they were born nor of the people who were born in the same area.

Geographic measurement of lifespan inequality reflects where people die and at what age, not the potential lifespans of those born in those places: for people do move around.

IMF: "Don't balance budgets—steal wealth!"

A disturbing Forbes piece reporting the latest IMF thinking. Which, shockingly, is that a) governments are so broke that even if they confiscated all the wealth of the richest 1% they'd still be broke; which means that b) they're going to come after everyone else's savings and pensions too; and c) that even then, governments won't be able to live within their means; so d) it will come down to all of the above, with debt defaults and inflation making up the difference.

As the Forbes piece says, the idea of governments living within their means, or getting their Ponzi-scheme pension and welfare systems under control, doesn't feature in the IMF thinking. it is more concerned about how to tax people who try to shift their wealth out of the grasp of the overspending politicians: "taxing different forms of wealth differently according to their mobility," as the Fund puts it, "...to make it harder for the very well-off to evade taxation by placing funds elsewhere."

Farewell, then, to the tax competition that might pressure governments to provide good value for their taxpayers' money. And farewell to the fiscal probity – the notion of governments living within their means – that the IMF once stressed. Instead, it seems that even the world's bank manager reckons it's OK for politicians to spend profligately and then steal the wealth of their citizens to pay the bill.

Which just shows you how deep the rot has penetrated. But at the same time, as I read all this, I get the strange feeling that Atlas is beginning to shrug.