Japan’s crisis and the anti-nuclear backlash

Germany and Switzerland suspend plans to build new power stations. Will others follow?

The nuclear crisis in Japan continues to get worse. After an explosion at reactor 2 at the Fukushima power station and a fire (now extinguished) at reactor 4, radiation from the plant has reached harmful levels. Everyone within 30 kilometres of the danger zone has been told to stay indoors, and a no-fly zone has been imposed around the power station.

The prime minister, Naoto Kan, has warned: "Radiation has spread from these reactors and the reading of the level seems high . . . There's still a very high risk of further radioactive material coming out." The plant's operator, the Tokyo Electric Power Co, reported dose rates of up to 400 millisieverts per hour – eight times the legal limit for exposure in one year.

But as several scientists have reminded us this morning, this is not another Chernobyl. The four damaged reactors at the Fukushima plant were shut down automatically when the earthquake was detected. In Chernobyl, by contrast, the reactor exploded while operating at full temperature, with the result that far greater levels of radioactive material were released.

Despite this, the Fukushima accident has already prompted a rethink in several European countries not renowned for their large earthquakes. In Germany, Angela Merkel, who reversed the popular SPD-Green pledge to phase out nuclear energy by 2022, has announced a "three-month moratorium" on plans to renew 17 power stations. In other words, the Japanese catastrophe has provided Merkel with the political cover necessary to drop an extraordinarily unpopular policy (88 per cent of the public want all plants closed).

Germany isn't alone. Switzerland, another country not known for its high levels of seismic activity, has suspended the approvals process for three new nuclear power stations.

In Italy, where large earthquakes are more common, plans to introduce nuclear energy by 2013 are now in doubt. But it's notable that the US, where eight plants are located on the earthquake-prone West Coast, has offered a robust defence of nuclear power. Yet as the New York Times noted: "most of the nuclear plants in the United States share some or all of the risk factors that played a role at Fukushima Daiichi: locations on tsunami-prone coastlines or near earthquake faults, ageing plants and back-up electrical systems that rely on diesel generators and batteries that could fail in extreme circumstances."

Given the uncertain outcome of events in Japan, other countries, including Britain, are suspending judgement. The twin challenges of energy security and climate change have bolstered the case for nuclear power in recent years. The long-term consequences of any decision to change course deserve serious consideration.

George Eaton is political editor of the New Statesman.

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR