Monday, 22 December 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)

  • 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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