Sunday, 25 October 2015

Energy Security

The decision, earlier in the week, to give the contract for the construction of a new nuclear power station, at Hinckley Point, to a consortium comprising French energy company EdF, and the Chinese government, has raised questions about energy security from a number of angles.

There has been widespread under-investment in UK infrastructure for a very long-time. Despite, all the advantages of the bonanza of North Sea oil that Britain enjoyed from the early 1980's onwards, which brought huge amounts of tax revenues into the coffers of the Treasury (£69,838 million between 1980 and 1997), the Tory governments from 1979 to 1997, squandered nearly all of it. Instead of using this windfall to repair the roof of Britain's crumbling infrastructure, whilst the sun was shining, the Tories instead allowed the infrastructure to rot even further, imposing austerity measures that not only prevented necessary investment, but even undermined vital maintenance. 

Roads were left to crumble, hospitals were closed and those remaining, many of which were built in Victorian or Edwardian times, were left unmodernised, and often even unmaintained. Its not surprising that satisfaction and support for the NHS fell to their lowest levels by the mid 1990's. The findings of the Social Trends Survey, found that the percentage of those satisfied with the NHS stood at 55% in 1983, and fell steadily until 1994, when it stood at 44%. It then fell again sharply down to 34% in 1997.

After Labour came to power satisfaction rose steadily to an all-time high of 64% in 2009. The same was true of schools. For years, school class sizes were too large, often averaging more than 30, compared to an average of about 10, in Public Schools. At a time when school rolls, in the early 1980's, were falling, the oil bonanza could have been a perfect opportunity to invest in the education of Britain's future workers, so as to provide the kind of highly educated and skilled labour required to work in high value production, that could have been competitive in the world market. Instead, falling school rolls were used as an excuse to close schools, and to leave class sizes unchanged, whilst the schools themselves often literally had leaky roofs. When I was teaching in the early 1980's, many classes were even in portacabins rather than actual school buildings.

At the same time, the Tory government created vast amounts of additional fictitious capital, through its privatisation process. The justification for fictitious capital, in the shape of shares, is that a firm that needs to buy productive-capital has to borrow money to buy the buildings, machines, materials and labour-power that comprise this productive-capital. The firm borrows this money from owners of loanable money-capital, in various ways, such as issuing bonds, or shares. But, all of the industries that were privatised by the Tories in the 1980's and 90's, already had all of this productive-capital! It had already been bought, over previous decades, by the taxpayer. All that selling shares in these companies did, therefore, was to allow the owners of those shares to be able to draw a revenue from them, which itself was only payable as a result of the profit generated by the real productive-capital that had previously been bought by the taxpayer.

Despite all of this, the Tories still managed to run budget deficits during all but two of the years they were in office, and to run an average deficit to GDP ratio that was twice what it was under the succeeding Labour government, despite the fact that the Labour government had to begin to make up for all of the neglect that those Tory governments had been responsible for over the previous eighteen years.

There is nothing new in that. There were Tory governments from 1951 through to 1964, during a period of rapid economic growth and prosperity, yet the Tories only managed budget surpluses in three of those years (1951,1955 and 1958). Moreover, the surpluses were tiny compared with the deficits they ran in the other years. The total surpluses came to just £177 million, whereas the total deficits came to £5,031 million! Yet, during that period, Britain suffered a series of shortages. As the TV series, Planet Oil, showed recently the great smog of 1952 was a result of Britain burning too much coal inefficiently, when it lost control over its oil supplies from Iran. It was that, which led Britain to enlist the support of the US to undertake a dirty tricks campaign, followed by a coup to overthrow the Mossadegh government, so as to regain control over the oilfields.

Even as late as the early 1960's, there were regular power outages, not just of electric, but also of gas, prior to the introduction of North Sea gas.

Once again, Britain is living on the edge of such power outages, due to lack of investment, just as lack of investment in sufficient reservoirs, maintenance of water mains and so on, means that, even with Britain's rainy climate, every time there is a few dry weeks, the country faces a drought! The UK now imports a lot of its natural gas, and has very little in terms of storage capacity compared to other European countries. The safety margin for electricity supply is now also very narrow, so that a very bad winter could cause blackouts due to lack of capacity.

That is why large scale investment in new capacity is required. But, energy security requires that a mix of different energy sources is used. (I wrote a feature article on this for Socialist Organiser, back in the 1980's, that I will reproduce at some point).  The ideas coming out of the Corbyn camp to reject the old, bureaucratic, state owned forms of energy production and supply are interesting. Its long been known, for example, that a lot, up to 30%, of power is lost in transmission of electricity across the national grid. It makes sense, therefore, to look towards more community based power generation, so that power is transmitted shorter distances, though it would be necessary to maintain a national grid, in order to provide the security of supply needed, in case of problems at any local level. That opens up the possibility not just of combined heat and power generation systems, but also of the use locally of biomass, and other forms of energy. It also means at this local level that instead of either ownership and control by private capitals, or by the capitalist state, the possibility opens up of ownership and control by the workers themselves in various forms of co-operative, or other mutual organisation.

The question that has been asked in relation to Hinckley point is should the UK allow China to play a role in the provision of a power station, because it might use it as a weapon at some point in the future. But, that issue arises also with domestic private capitals.

In 2000/2001, California suffered a series of energy blackouts. It was subsequently discovered that the cause of these blackouts was deliberate manipulation by Enron. The market manipulation was itself a consequence of deregulation of the energy production and supply industry. As contracts came up for renegotiation, over the prices to be paid, Enron, took power stations off line, under cover of the requirement for maintenance, so that shortages arose, and blackouts occurred. Between April 2000 and December 2000, wholesale electricity prices rose 800%!.

This deliberate action by Enron caused a number of business, depended on secure energy supplies, to go bust, but it also caused the bankruptcy of some larger companies such as Pacific Gas and Electricity. A subsequent investigation, which discovered taped telephone conversations, showed that the taking off of power stations for maintenance at peak times, was a thinly veiled cover for this manipulation .

This indicates why the labour movement needs to spend time drawing up its own longer term plan for energy security, and for ensuring that such vital strategic industries are brought under the direct ownership and control of workers themselves. The lessons of the 1984-5 Miners Strike show why such vital industries cannot be placed in the hands of the capitalist state either, not only because it has no reason to run these industries in the interests of workers, or to allow workers any control over them, but because the capitalist state can actually use such industries against workers.

For example, as Marx sets out, when workers created their textile co-operatives in Lancashire, or the agricultural co-operative at Ralahine, they were charged higher rates of interest on the money they borrowed. Its also the experience indicated in the film  “Chance of a Lifetime”.

If workers are to develop their own property in opposition to capitalist property, they have to be aware of the danger of the capitalist state doing everything in its power to frustrate their efforts. That requires a strategy for bringing about direct workers ownership and control of these strategic industries.

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