Five questions answered on comments from Ineos boss that Hinkley power will be "expensive"

How much will energy from Hinkley cost?

The boss of manufacturers Ineos - one of the UK's biggest energy consumers - has warned that energy produced from the planned Hinkley Point C power station will be too expensive for business. We answer five questions on Ineos’s boss’s comments.

What exactly has Ineos boss Jim Ratcliffe said?

Speaking to the BBC Ratcliffe said UK manufacturers would not find the price of energy from Hinkley affordable.

Mr Ratcliffe said: "The UK probably has the most expensive energy in the world."

"It is more expensive than Germany, it is more expensive than France, it is much, much, more expensive than America. It is not competitive at all, on the energy front, I am afraid."

How much will energy from Hinkley cost?

The government has signed a deal with France-based EdF to pay a guaranteed price of £92.50 per megawatt hour (Mwh) for 35 years. EdF is developing the station with the backing of Chinese investors.

Ineos owns the Grangemouth power plant in Scotland and has recently agreed a deal for nuclear power in France at 45 euros (£37.94) per Mwh. However, the world nuclear association pointed out this deal was for an unknown duration whereas the government’s deal with EdF is for 35 years.

What have other experts said?

The World Nuclear Association told the BBC: "It should be pointed out that France has the highest proportion of nuclear in its generation mix and lower than average EU power prices, so there is nothing automatically expensive about nuclear power.”

In October John Cridland, director-general of business lobby group the CBI, speaking to the BBC said:

"It's important to remember this investment will help mitigate the impact of increasing costs. The fact is whatever we do, energy prices are going to have to go up to replace ageing infrastructure and meet climate change targets - unless we build new nuclear as part of a diverse energy mix."

However, Dr Paul Dorfman, from the Energy Institute at University College London, added: "what it equates to actually is a subsidy and the coalition said they would never subsidise nuclear".

How much energy will Hinkley provide when it is up and running?

Once developed Hinkley will provide 7 per cent of the UK’s energy mix. It will cost £16 billion to build and is expected to be ready by 2023.

How is Ineos currently doing, wasn’t it going to close a short while ago?

Yes, the company had announced in October the permanent closure of the Grangemouth plant in Scotland, which would have affected 800 jobs. However, when a bitter dispute between Ineos and the unions was called off it was announced that the plant would stay open.

However, Ratcliffe has said that Ineos, which will be the first company to import shale gas from the UK, was on a “knife edge” since that troublesome time.

He told the BBC: "I think Grangemouth has the prospect of a very good future if it can get through the next three years."

"Attitude on the site is much more positive and you can see people are really anxious to move on."

Grangemouth provides 70 per cent of the fuel used at Scotland's filling stations.

Chairman of INEOS, Jim Ratcliffe. Photograph: Getty Images.

Heidi Vella is a features writer for

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.