Hinkley on the agenda in Hangzhou but no decision

Theresa May will discuss the Hinkley Point C nuclear power station development with President Xi Jinping of China and President François Hollande of France at the G20 summit meeting next week in Hangzhou in Southeast China but no final decision is expected.

There had been speculation that the summit meeting was a possible point at which Mrs May’s decision could be announced. This would have been especially the case if the decision was positive as this would help relationships with the other leaders, particularly the Chinese. However, in advance of the meeting officials have been clear that no decision will be announced at the summit.

There do appear to be some indications that an announcement is close, possibly by the end of the month. That the decision is so close but will not be announced at a point that will most please the Chinese – with whom the UK is seeking to build a closer trading relationship post Brexit – does not bode well for a positive decision for the Chinese investment to proceed.

If the project is blocked with Chinese investment it is though not necessarily fatal for Hinkley. There are people close to Theresa May that think that the project would be cheaper if the Government was to use its borrowing power to back it. So one option is that the UK Government could take the stake that the Chinese Government was previously considering. This was not an option under the coalition as it had pledged (at the Lib Dems insistence) not to subsidise the project and David Cameron’s Conservative only Government had continued this policy post 2015. However, it is not a position to which Theresa May considers herself bound by and so it may be considered now.

If ultimately Chinese investment is blocked and the UK Government decides to take over that stake all the existing contracts will still need to be renegotiated and so there will be considerable further delay as a result.