Tuesday, 29 July 2014
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Energy and Thatcher: a tangled legacy

Both sides of the environmental debate are keen to claim Thatcher as one of their own. She was, it’s said, the first major politician to bring climate change to prominence as a global issue; she made speeches on the subject to the Royal Society in 1988 and to the United Nations General Assembly the following year; surprisingly, she even acknowledged in these speeches that the free market ‘would defeat its object’ if it did more damage to quality of life through pollution than it could improve it through providing goods and services.

It’s been said that Thatcher’s opinions on this were shaped by her background as an industrial chemist and her ability to read research papers, but frankly this seems to be as much of a myth as her contribution towards developing Mr Whippy ice-cream (though hot, rather than cold).

Climate sceptics point out that Thatcher later changed her mind — surely one of the few times this happened — and in her 2002 autobiography said that she now doubted global warming. But by that point she’d been out of office more than a decade, her party had been out of government for five years, and her influence on policy had waned altogether.

Thatcher acknowledged that the free market ‘would defeat its object’ if it did more damage to quality of life through pollution than it could improve it through providing goods and services

Thatcher dominated her party so much that it’s difficult to separate her opinions and policies from those of her governments. But she did take some action on the environmental front. At the time, ozone depletion was seen as a more pressing concern than emissions-induced climate change, and Thatcher signed the UK up to the Montreal Protocol, the treaty which reduced and eventually banned chlorofluorocarbons and related compounds. She also created the Hadley Centre for Climate Change at the Met Office, which opened in 1990.

What she doesn’t appear to have done is to make any policy specifically to tackle climate change. The 1986 energy act — which paved the way for privatisation of the electricity sector — brought in a commitment to reduce the amount of fossil fuels burned, but this was presented in terms of energy efficiency and money saving. She brought in the Non-Fossil Fuel Energy Obligation, which forced electricity distributors to buy power from non-carbon emitting sources. This later became the Renewables Obligation, but its original intention was to subsidise the nuclear sector, not renewables. Moreover, the economy in the 1980s was underpinned by the revenues from North Sea oil and gas to much greater extent than it is now.

Energy politics was of course extremely significant during the Thatcher era, but the miners’ strike had nothing to do with the carbon emissions from coal, even though it contributed to the later ‘dash for gas’. It’s hard to see whether diversity of energy supply even figured in ’80s Tory energy policy; Thatcher was a strong proponent of nuclear power, proposing early in her premiership to build a nuclear station every year for ten years; but in the event, only one was built, Sizewell B. The other big nuclear project of the Thatcher years, the Thermal Oxide Reprocessing Plant (THORP) at Sellafield, was actually started under the previous Labour government, and wasn’t completed until the Labour party regained power.

The nuclear sector had to be separated from the rest of the Central Electricity Generating Board before it could be privatised, because the costs of decommissioning older nuclear plants made it an unattractive investment. The subsequent privatisation, of course, was what led to all of the UK’s electricity generation capacity now being owned by European companies; I doubt whether Thatcher would approve of that, considering her famous draping of a hanky over the British Airways tailfin design that did away with the Union Flag and her equally famous antipathy to Europe.

The non-appearance of a new nuclear generating fleet in the ’80s might actually give us a clue as to what Thatcher’s legacy actually was to the UK energy industry. Nuclear plants weren’t built because of their cost: they were in competition with cheaper forms of generation, using gas. Energy policy today regards price competition and limiting of carbon emissions as less important than diversity of supply — nuclear plants are to be built despite their being more expensive than fossil fuel-burning ones — but the feeling that all energy sources are in competition with each other still persists, as we can see from comments that the government ‘is putting all its faith in nuclear when it should be building renewables’ or ‘is building useless windmills when it should be looking to nuclear’. And back-bench Tories of the more Thatcherite persuasion frequently call for price to be the only determinant of energy policy.

Margaret Thatcher famously valued competition far above cooperation — it’s perhaps the defining aspect of her politics. It’s not a huge leap, I think, to see the foreign ownership of UK energy and the continuing scrap over energy generation technologies as a continuing manifestation of that outlook.

• I’d like to thank Declan Curran of HomeFix Direct for his help in preparing this article


Readers' comments (15)

  • Interesting slant on history. The idea that nuclear is not a renewable energy seems perverse though. Whether the lady's motivations ref the coal industry were carbon-reduction based at the time, the effects certainly were, and could rightly be seen as far-sighted in a way most politicians never aspire to be.

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  • It's a good point on nuclear; it's not generally counted as a renewable because the fuel cycle is not closed, and the carbon profile of building the power stations and extracting uranium is very large. But it is a non-carbon emitting technology when in operation.

    As for the point on coal, it's worth noting that the UK imports around 80 per cent of the coal burned in power stations, more than half of this from Russia. Whether this would be the case if the British coal industry hadn't been so heavily scaled back is open to question.

  • Margaret Thatcher famously valued competition far above cooperation — it’s perhaps the defining aspect of her politics.
    It's global now and cooperation is probably more relevant now to finding sustainable solutions

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  • Unfortunately her complete lack of basic understanding of how a national manufacturing sector works has been continued ever since. My personal opinion is that running a country should never be about individuals anyway and its such a shame our system of government now appears so antiquated versus the rest of Western Europe. For those who hope for an Engineering sector like Germany's unfortunately it will be a very long wait!

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  • It is a complicated picture. The recent newsreel of the City enjoying its freedom to make ''loads of money'' shows who instigated Corporate greed. The same lack of business understanding frittered away North Sea oil without (apparently) a blink. The conversion of Power generation from Coal to Gas has and will continue to cost us dearly. I don't think she had the slightest clue about Business. Perhaps we should not forget that the Power workers were next in line after the Miners. But we should not blame her necessarily, but her advisors and British Management in general who failed to stand up to the unions thus killing off much British Industry. I am aware few will agree.

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  • The dominant legacy is the absolute, unmitigated disaster of instigating a single-minded focus of our country’s wealth production by fiscal means. Future generations when examining the state of affairs will be aghast with horror on what they will inherit: A ‘monopoly’ of seemingly collaborative energy companies with an apparent licence to print money (pardon the pun on recent government policy). Government borrowing escalating to an amount which is so large as to be impossible to visualise; future generations after generations will be saddled with debt. UK credit rating downgraded – will likely reduce further; (what happens when we cannot afford to pay this back or cannot borrow any further?) There is no political points scoring to be had here; this mindless stampede to fiscal heaven (or hell to be more appropriate) is continued by successive governments of both persuasions, such is the ‘success’ of this legacy. UK plc has no substance behind the ‘paper economy’; the shelves in the Thatcher shop (a touch of irony) are empty – long since sold off with the unrealistic aim of ‘lots of private companies competing will drive down prices’. We print money in tens of billions - grotesque quantities - to ease our problems; this has now become the norm and no one seems to worry? Imagine if it is possible, if this same amount of money was put into creating/expanding companies that actually make and export something!
    The one lasting memory I will have of the Thatcher years is a news item at the time which showed a chart of the UK job losses (mainly in manufacturing), sometimes on a daily basis – after weeks going into months, eventually I had to stop watching.

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  • I would like to thank Margaret Thatcher for the efforts she put into getting the NISSAN factory into the North East, which now makes upwards of 0.5m cars per annum.

    Other aspects of the manufacturing strategy that subsequent conservative and labour governments have followed of promoting high technology industries foremost is very short sighted in my opinion. This country needs lots and lots of low technology industry as well and this requires a very carefully planned strategy to ensure a proper industrial sector.

    Tax revenues have suffered with the collapse of much of our older industries and these are very difficult to replace. I welcome that the current conservative liberal coalition government has recognised that a financially strong nation like Britain also needs a very strong industrial base.

    When Ford workers at Dagenham gave up their jobs for huge redundancy payments that were offered by Ford at the time, the country also gave up and lost income tax revenue and national insurance contributions.

    Government has a role to play to ensure the greater good of the nation state is served on these important issues.

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  • What is missed in this article is the sad fact that the UK squandered its lead in many renewables though the ill judged lack of coherence when it came to energy and industrial policies. One did not feed the other as it should.

    The nascent wave industry was effectively knifed in the back at a critical moment (1982) in favour of more established technologies and in doing so put the entire marine energy project back a generation. There were jobs in this and we gave them up. It seems incomprehensible now that wave energy could be seen as a threat to the Prime Minister's nuclear dreams; however that is how it came over and the funding was withdrawn from ‘Alternative Energy’ research in favour of more nuclear.... which we then didn't build either.

    But it was not just wave energy; we also lost our way with wind and as a result our balance of payments is hurting from the import of foreign wind turbines now. Of course it is hurting less than the costs we would face if we stayed with our coal/gas addiction, but none the less we would be in an even more positive state if we were harvesting our own energy with UK made machines. But we folded our hand in that game too, and now we are paying for our lack of backbone.

    So what can we learn from history? To me it clearly points to the need to not make the same mistakes with our present marine energy industry that we made in the 80s. There are jobs being created NOW and investments made to bring this new technology to market, but scarily it is just at the moment that there are big calls on the public purse to underwrite the long term costs of a new nuclear fleet. There genuinely does not seem to be a real choice to be made here, but the legacy of some seeing renewables as a threat to nuclear seems to remain. Hopefully the openness at the cost of the nuclear investment underwriting will bring the entire energy system into sharp and informed focus. Such focus will clearly show that renewables are not expensive. Having no energy is the really expensive option for an economy.

    We must not fritter away our world lead in marine energy because of comparatively short term cash problems. THIS is the moment to dig deep and decide we are going to make a new industry the UK can be proud of.

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  • "Where there was hope there is now despair…or was it the other way around?"

    Margaret Thatcher, aided by her advisor Sir Crispin Tickell, should both be rewarded for their contributions to Industry – in particular the Futurology Industry**. This Industry exceeds all others in the growth areas of inflated claims and ‘scaring the public’ out of their lethargy for their own good. It has generated several spin off industries in the related fields of fear, despondency amongst the young and near societal paralysis and a high level of a lack of ambition in some major sectors.

    Of course several of the older industries were casualties in this new world. Old industries such as transportation which supported dangerous ideas such as people from across the globe meeting face to face to gain a better understanding of each other and maybe having a beer or two or just a collaboration, needed to be restricted to a small but dedicated elite who needed to attend the new climate change industry conferences.

    -----------ok more seriously

    ** From her Royal Society speech in 1989:

    “We are told that a warming effect of 1°C per decade would greatly exceed the capacity of our natural habitat to cope.”

    In fact so far it has been about 0.2 degree per decade. Not to be sniffed at or ignored but out of all proportion to the panic she initiated.

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  • Although she didn't plan it that way, Mrs Thatcher did more to gut the huge planned nuclear programme than any other politician. Her decision to privatise electricity was an amazing step. Sure enough it flushed out the true costs of nuclear - 8p/kWh rather than the 2.145p/kWh pretence argued for at the Sizewell Public Enquiry.

    History has shown us that on energy Labour talk a good talk but always end up supporting nuclear, while the Tories actually expose (sometimes inadvertently as a result of other policies) the hidden costs of big and costly public sector schemes which then get cancelled Dounreay Fast Breeder got canned as a result of this.

    Right now all thoughts of good value seem to be going out of the window. The thought of EDF demanding 10p/kWh for 40 years is shocking but true. Don't talk of expensive wind power when a supposedly mature technology needs subsidies at this level

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  • Maggie thought competition was the answer but she had no idea about the way the market works. Once shares were issued there was no stopping the overseas companies grabbing what is effectively a monopoly, gas, electric and water. It clearly showed she hadn't really thought it through.

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  • We will live with the Thatcher legacy for a long time, she will be remembered …but not in a good way.

    She came across as a strong leader but was actually only a puppet; it was Dennis & the banking class who pulled the strings (the power behind the throne).

    Didn’t they do well out of it !!

    The spin doctors portrayed her as a business orientated technocrat but as has been said before that was not the case.
    She ended up believing the spin & thought she was invincible, ending up dividing a nation, hence the most downloaded I-tune today is “Ding Dong the witch is dead “ with impromptu street parties. No other prime minister has achieved that level of hatred.

    The general level of ignorance of technical subjects in the political class is appalling, yet they make the decisions that affect us all.

    I’d prefer to keep politics out of science, technology & engineering, the politicians are ruining our country for ideological idiocy …& the cash.

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  • Sorry, but all this criticism of Mrs T is just not right. Without the reforms in industrial relations, in privatisation, in energy policy we would be in a far worse position than we are now. Coal, Steel and the other nationalised industries were not and never should have been there to mop up unemployment and to be an endless soak of taxpayers money. If an industry doesn't pay and the debts are increasing year on year then why should they be treated differently just because the government owned them? And why should the workers within them consider endless strikes for more and more pay, leading to even greater losses, be a good use of public money?
    Her methods may have been blunt, but the logic is inescapable. If a factory, or a pit, doesn't and can not make money, it should be shut. It is not a public service like the NHS (even there we could do with some Thatcherite medicine), it is a business and should be treated as such.
    And as for her support for nuclear, this no more or less than any other renewable energy (and don't forget coal is also renewable, it just takes longer to renew). The answer is to control the market by regulation to ensure open book pricing when selling to the public, not public ownership and bloated management and manning.

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  • I would like to offer a few of thoughts to this excellent debate:
    1. EDF is substantially a French Government owned enterprise.
    2. The French government has stakes in many (all?) of their big utility businesses.
    3. The French nation has its own economic and fiscal problems, but at least their government has a revenue stream to supplement their tax raising powers. Pity so much of that stream now springs from Thatcherite Britain.

    I voted conservative in 1979 because I thought a conservative government would invest the rising tide, indeed the incipient flood, of North Sea wealth in people, skills and infrastructure, and that we would emerge with a renewed homeland, finally fit for heroes. How wrong can one be?

    Looking back I tried to decide where all the money had gone, along with all the other money raised when they sold us our own assets and extended home and share ownership by stealthily slipping another hand into our wallets. The answer is “breaking the unions”.

    The country bore the extraordinary cost of all those fine people thrown out of work, with as many non government-owned industries shut down for lack of a home market as commercially moribund nationalised industries, by raiding the capital from the national Deposit Account. McMillan called it “selling the family silver”, and how right he was. The official unemployment figures were only the tip of the iceberg. Incapacity benefit was used to hide millions more, and that many people idle costs a fortune.

    In 1979, had she cut the subsidies, along with regulations, and set the enterprise culture free in the context of a society (yes! heirs of Mrs T, it did, does and always will exist) set on renewing itself physically and intellectually, we would now be enjoying an altogether different Britain. We would not have the catastrophe of the class system where the division is between those with education from those without, and thereby without work or hope.

    No, we would have a modern and robust infrastructure and none of this absurd debate about whether or not we should replace our Victorian railway network with something from our own era. We would not be facing the probability of power supply deficiency within a decade. We would be living comfortably, but within our means, based on a balanced economy in which manufacturing played a sensible part.

    But we are not. Why? All for the lack of a decent home market in the 1980’s.

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  • "The dominant legacy is the absolute, unmitigated disaster of instigating a single-minded focus of our country’s wealth production by fiscal means".

    How true. But unfortunately this focus did not apply to the steel industry. The smaller works of Corby, Consett, Ravenscraig, and others were financially and economically profitable when they were shut down so that more inefficient newly constructed plants could start up using imported raw materials in huge quantities.
    National cost effectiveness was not considered. The coastal sites using imported coals had the added advantage, important for some, of reducing the demand for local coals.

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  • Editor Quote:
    It's a good point on nuclear; it's not generally counted as a renewable because the fuel cycle is not closed, and the carbon profile of building the power stations and extracting uranium is very large.

    And the ratio of actual energy output in relation to the whole cost of build of wind turbines???

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