Lost in Space and a Broken Energy Market: Blame It on the Obsession of a Small State | Will Hutton

Twenty-two years on and it is already clear that this century demands challenges and responses for which the British Tory mentality, with one or two honorable exceptions, is not fully prepared. This century doesn’t need a tiny state – it needs an agile state. More years of denial and Britain will be in very serious economic and social crisis.

Last week came a vignette of the small state’s folly, ceding a large area of ​​21st-century economic activity to France and undermining our national security – close observers believed no minister to be guilty of their brutality. Didn’t know the horror. I speak of the merger of former British-controlled space company OneWeb with France’s Eutelsat, turbo-boosting the EU’s space effort. These Brexiters are remarkably incapable of Brexit. But then with disability comes territory.

OneWeb was an opportunistic way for Britain to recover lost ground in space due to Brexit and the European Union’s forced exit from the Galileo and Copernicus programs. Saved from bankruptcy by a daring £500m bid by the UK government two years ago, OneWeb holds the valuable allocated orbit “shells” and spectrum rights, representing an astonishing 15% of all space available for service delivery on Earth. is considered to be. This spatial real estate is the basis for a unique constellation of satellites and the next phase of commercial space development and sophisticated communications – worth billions in the coming decades. Last week, Tory ministers let it slip through our fingers.

Britain’s stated goal is to become a globally competitive space power. forget it. Sure PM Truss Wouldn’t Dare Any OneWeb To Attempt

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The Ukraine War forced OneWeb to reschedule its satellite launch program at some expense. Every shareholder except the British agreed: tax cuts were more important, the state should shrink and rule the market. Eutelsat saw the opening, secured OneWeb board approval and offered a deal to buy the risk-averse British.

But beneath the face-saving baubles about retaining the board seat and golden part, crucially the UK will not have control over future space systems developed by OneWeb or how any of its spectrum is used. Johnson may be a liar, a constitutional barbarian, and corrupt, but he had the chutzpah to kick-start the deal (run by Dominic Cummings). Britain’s stated goal is to become a globally competitive space power. forget it. Make sure PM Truss won’t dare attempt any OneWeb.

But it is precisely this agile state mentality that is needed in all aspects of policy – ​​not about tax cuts, aspiration, the magic of markets, attacking the awakening and bringing back grammar schools.

Our broken energy market is one example. British consumers face the highest energy bills in Europe. This should come as no surprise: the approach embodied by the OneWeb deal has been applied to the electricity market. The electricity tariff is not the average price of electricity produced by individual power generators, as directed by the “large state” Central Electricity Generation Board, which did not lead to a violent increase in prices. Surprisingly, our bills do not reflect the contribution from low-cost renewables and nuclear whatever the cost required to get the most expensive producer into the grid to meet the required base load. Thus consumer tariffs may be the highest, reflecting rising market prices of gas.

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Nor does the market madness end here. Unlike a car or a TV or a new outfit, electricity doesn’t vary with the producer: it’s invisible. There is nothing to differentiate the power; It is the least suitable material for making a market. But in the Tory small-state mentality, markets are always best, so the theory is that individual producers – wind farms, nuclear power, gas-fired power stations – can form a market selling electricity to each other within a short period of time. do construction. Long term contract? Average of cost across all generators, instead of closing in the highest cost generator? It means a very large state.

The Ukraine war and rocket oil and gas prices have skyrocketed the whole concept. Thirty suppliers have been busted. Bills were always going to go up, but more rational electricity generation and pricing systems, along with building in incentives for building low-cost renewable capacity, could have pulled some of the sting. As UCL professor Michael Grubb argues, the price difference between cheap renewable energy and ultra-expensive gas is now “unconscionable”.

What to do? Every energy producer must be required to incorporate as a public benefit company in emergency legislation, constitutionally forcing them to put consumer interest as their corporate objective before profit. Combined with these newly introduced power generators, regulator Offgame must collect its now open book costs and calculate a standard tariff for all consumers that reflects the lower production costs of renewable energy and nuclear power. Expensive gas-powered generators that will now do damage can apply to be nationalized (as the French recently did with EDF) or offered 50-year soft loans and grants to reduce them . It should be the producers who take some of the losses from the rise in gas and oil prices; The hit should not be on the shoulders of the consumers.

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Planning laws should be relaxed immediately to allow onshore windfarm construction, sharing some of the revenue with those local communities. Interestingly, Grubb proposes the creation of a “green power pool” in which renewable producers store their cheap energy for sale to consumers. There must be a crash program of building a national network of home insulation and electric charge points for cars. Discounts on consumer energy bills should be at least well targeted.

It’s the nimble 21st century state in action – a concept both Liz Truss and Rishi Sunak know will get them no votes from older members of the Conservative Party who idolize Mrs. Thatcher. Instead, it is better to abandon Britain’s stake in the space and attack cheap renewable energy as a “wake up”. The Conservative Party is happy with this. The gap between the real world and the Tory world has never been so deep.

Will Hutton is an Observer columnist

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