Hinkley C escalating costs – do we have too many LEP eggs in the Hinkley C basket?

First, the latest report:

“Hinkley Point C in Somerset will cost £1.5bn more than planned, says developer EDF, and completion could be delayed by 15 months beyond the 2025 target date. In one sense, this news lacks any element of surprise. EDF only seems to build nuclear reactors that are late and over-budget, as witnessed in Finland and on its own patch at Flamanville in Normandy.

Yet the timing of EDF’s “clarifications” is a shock. It is very early in the life of this £18.1bn (now £19.6bn, possibly rising to £20.3bn) project to be recasting the numbers. The tricky stages of construction, like pouring the right mix of concrete, lie ahead. The additional costs relate to mundane matters, such as “a better understanding” of UK regulators’ requirements and “the volume and sequencing of work on site”.

These are planning areas in which EDF would surely have made allowances for uncertainties. That all that slack, and more, has been used up is puzzling. Sceptics within EDF who argued that Hinkley is too big and too financially risky will feel vindicated already. EDF’s projected rate of return on the project was never high at 9%; now it is down to 8.5% and will fall to 8.2% if the delays materialise.

Still, it’s a French problem, right? Didn’t the UK government insulate us by making EDF and its Chinese co-financier shoulder the construction risks? Wasn’t that the trade-off for the UK guaranteeing to buy all Hinkley’s electricity for 35 years at twice the current wholesale price?

Well, yes, that’s how the contract is structured, and EDF’s UK boss was full of reassurance on Monday that UK taxpayers remain protected. But no contract of this size is ever so straightforward, as the National Audit Office pointed out in its blistering report last week.

“If the HPC [Hinkley Point C] project or developer runs into difficulties, the UK government could come under pressure to provide more support or take on additional risk, particularly given HPC’s potential importance to ensuring energy security,” said the NAO.

That dire circumstance remains some way off, but it can’t be ignored. What if real engineering problems follow? What if EDF’s projected returns fall to 7%, which would be closer to the company’s cost of capital? Would EDF seek better terms knowing that Hinkley is scheduled to provide 7% of our electricity?

“The [UK] government will hold a stronger negotiating position if it maintains alternative ways of ensuring energy security if HPC runs late or is not completed,” said the NAO. That advice was sound last week, now it looks prescient.

It is bad enough that UK consumers are locked into this “expensive and risky” project, as the NAO called Hinkley. It would be calamitous if we end up being bullied into paying more. Ministers need to draw up a proper contingency plan – starting now.”

https://www.theguardian.com/business/nils-pratley-on-finance/2017/jul/03/ofgem-energy-price-cap-shows-mays-help-for-millions-is-off-the-boil

And why does this matter to us in Devon? Hinkley C is Somerset isn’t it? Ah, but our Local Enterprise Partnership covers Devon AND Somerset, so masses of money that used to go directly to our councils for local projects is pouring into their (unaccountable and non- transparent) coffers.

And because these are the projects our LEP is putting OUR money into on the assumption everything is hunky-dory:

Bicton (Cornwall College) – this project is a dedicated Skills Centre for Engineering and Construction, including nuclear.
£300,000 from Growth Deal.

Bridgwater – HPTA – National College for Nuclear (Southern Hub). This project is to base the National College for Nuclear (NCfN) – Southern Campus on Bridgwater College’s newly developed University Centre in Cannington.
£3 million from Growth Deal

Exeter College – a Centre for Advanced Industrial Automation to address the LEP priorities for the HPTA, Hinkley Point C supply chain and the New College for Nuclear advanced manufacturing and Business Incubation.
£3 million from Growth Deal

South Devon College – The project is a suite of small capital investments that will enable the College to extend and enhance the range and quality of our provision to meet the direct and indirect skills needs for the new nuclear development at Hinkley and address the replacement skills resource needs locally.
Already received and spent £213,980 from Growth Deal

Yeovil College – Addressing skills gaps in Construction/Civils and Facilities Management
Provisional allocation of £637,500 from Growth Deal.
Of which our LEP says:
“This project forms part of the Nuclear South West strategy – a strong partnership between three south west LEPs (Heart of the South West, West of England and GFirst) the nuclear industry, local authorities, academic and skills sectors and business support agencies – generating £55bn of nuclear opportunities over the next decade”

The above does NOT include the massive numbers of houses to be built in the Hinkley C area by companies such as Midas (LEP board member).

Check out the nuclear and other interests of LEP Board Members (including EDDC Leader Paul Diviani and non-Board member Mark Williams, EDDC CEO) here:

http://heartofswlep.co.uk/about-the-lep/lep-board/

AND IF THERE IS NO NUCLEAR INDUSTRY? WHAT THEN?

“Why do England’s high-rises keep failing fire tests?”

“… Undermining the building regulations

The first thing to know is that local officials no longer run all building inspections. England has a so-called “Approved Inspector” regime.

Contractors must no longer wait for a local authority official to check their work. Instead, they may hire people to check their construction processes meet the required standards. There is no single regulator – or arm of government – directly upholding standards.

Second, the most important requirement in the building regulations is to build a safe building. So long as you do that, the fine print of the rules does not much matter too much. That is why, when inspectors sign off sites, they do not feel the need to work directly from the government’s own guidelines. And the guidelines set out by government are rather old, and cannot specify everything in all circumstances.

That has left a gap into which esteemed sector bodies have stepped. Their umbrella organisation – the Building Control Alliance (BCA) – has issued advice about how to get a building signed off as compliant without using the type of materials specified in the government guidelines.

And it is the case that, in the event of some prosecutions or a civil case, breaching the government’s guidance would count as a serious strike against a builder. But it would also be the case that following widely accepted professional practise and BCA guidance may also constitute a defence in a suit for negligence and grounds for mitigation in a criminal prosecution.

The problem is that this BCA guidance does not just suggest ways of making new technology fit the old rules. It introduces loopholes. The net effect of the sector bodies’ guidance is to set weaker standards than the government’s rulebook. …”

http://www.bbc.co.uk/news/uk-40418266

Better-off buyers are the ones who benefit from help-to-buy

“Government schemes designed to help more people get on the UK housing ladder have little impact on improving social mobility as better-off buyers are most likely to benefit from the support, a report has found.

Research by the Social Mobility Commission reveals that many low-cost home ownership schemes are beyond the reach of almost all families on average earnings, prompting warnings that the UK housing market is “exacerbating inequality and impeding social mobility”.

Those benefiting from low-cost home ownership schemes, such as Help to Buy, earn more than one and a half times the national working age median income, according to the findings. …”

http://www.independent.co.uk/news/uk/home-news/government-home-ownership-schemes-families-average-earnings-social-mobility-report-commission-low-a7818616.html

Almost 300 staff made redundant in Devon schools due to cuts

“Nearly 300 staff at schools across Devon have been forced to take voluntary redundancy as a result of budget cuts at school, it has been confirmed. Schools all across Devon are on average funded £268 per pupil below the England average, which has resulted in a £24 million shortfall.

Figures released by Devon County Council show that while 212 schools in the county could benefit as a result or the new fair funding formula, another 129 would be even worse off than they are now. They include 24 secondaries, 103 primaries and two all-through schools. …

Matthew Shanks, Director of Learning at Education South West, which inclues Dartmouth Academy, Coombeshead Academy, Kingsbridge Community College, Teign School and primary schools at Christow, Blackawton, East Allington, Kingswear, Rydon and Stoke Fleming, said: “I don’t think there is a single school across Devon who hasn’t been affected by this.”

He added that the cuts in education budget have meant that 86 teaching assistants, 35 senior teaching leaders, 19 caretaking staff, 25 administrators, 55 teachers, and 52 curriculum support staff across 27 secondary schools in Devon will leave their jobs at the end of the summer term and won’t be replaced. …”

http://www.devonlive.com/education-funding-cuts-means-nearly-300-staff-have-to-take-voluntary-redundancies/story-30420745-detail/story.html

Cranbrook expansion plans including travellers site

For plans and pictures see quoted article.

“Plans for the southern expansion of Cranbrook have been revealed – and it includes 1,200 new homes, a new primary school, a sports hub, a petrol station, and a site for travellers.

Two new applications for the southern expansion of Cranbrook have been submitted to East Devon District Council for the outline planning permission for 27.2 hectares of residential development, 9.2 hectares of employment development, a new primary school, a local community centre, and sport pitches and tennis courts as part of a sports hub.

Since the build of the new town in East Devon began in 2010, 3,500 homes, a railway station, St Martin’s Primary School, play facilities, the neighbourhood centre, local shops, the education campus, the Cranbrook Farm pub, while construction of buildings in the town centre and the sports pitches are underway, while plans for the ecology park in the town have also been submitted.

Now, as part of the southern expansion for Cranbrook, the town is set to get an additional 1,200 homes, but also a petrol station, a residential care home, employment land, a new primary school, and an all-weather sports facility.

The long-running problem of travellers pitching-up in Cranbrook is also set to be solved as an area has been identified within the employment area site as a potential travellers site, but discussions will need to be held with the district council about the exact location.

WHAT THE APPLICATION INCLUDES

Residential

The parameters plan proposes 27.2 hectares of residential development of up to 1,200 homes.

Employment

Employment provision forms part of the mix of uses within the southern expansion area. It proposes 9.2 hectares of employment land, comprising of up to 35,000 sq m of employment uses and a petrol station with associated convenience retail and facilities. An area is identified within the employment area as a potential travellers site. Provision is also made within the employment area for a future expansion of the energy centre if required.

Education

A two form entry primary school is proposed within the southern expansion area.

Local Centre

A local centre is proposed in the heart of the southern expansion area to serve all the residents and the employment area. It will comprise of financial services, restaurants, pubs, takeaway and business uses.

Open space

Around 35 hectares of green infrastructure will be provides. The sports pitches are proposed in one central location on the southern edge of the development. The outline application sports hub land can accommodate an all-weather playing pitch with floodlighting, senior and youth football pitches, changing facilities, and a youth and children’s play area. Two adult rugby pitches and four tennis courts can be delivered.

The application says: “The adopted East Devon Local Plan identifies the future growth of the town of Cranbrook as part of the strategic growth of the area referred to as East Devon’s West End. Land is allocated within the local plan to meet the demand for the town to grow to 6,300 dwellings.

“The three outline planning applications for the expansion of Cranbrook to the west, east and south were submitted in December 2014 which sought planning permission for up to an additional 4,120 dwellings. The three 2014 expansion area outline planning applications are awaiting a decision.”

The latest application comes following public consultation on the plans over the past two years.

The application says: “The southern expansion of Cranbrook establishes an attractive and sustainable development that will become a place where people will to and enjoy living.

“The vision for the town is that Cranbrook will be a dynamic town, of a size to support a broad range of facilities, infrastructure and opportunities in a vibrant town centre and local centres sustained by its population. Cranbrook will be independent from, yet serving, existing communities, with the identity of surrounding villages always protected by a strong green buffer.

“The expansion of Cranbrook, including the southern expansion area, is able to realise that vision.”

http://www.devonlive.com/major-cranbrook-expansion-plans-revealed/story-30420895-detail/story.html

“One in seven UK private tenants pays more than half income in rent – study”

“Only 2% of homeowners spend similar a salary percentage on their mortgage, according to LGA research. …”

https://www.theguardian.com/money/2017/jul/03/one-in-seven-private-tenants-pays-more-than-half-income-in-rent-study-finds?CMP=Share_iOSApp_Other

Oh, those poor, poor developers with their begging bowls

“Documents show plans to create 36 sheltered apartments for the elderly should be worth nearly £1million to the Sidmouth community – but the developer has shown it is ‘unviable’ to pay more than £41,000.

Churchill Retirement Living hopes to demolish the former Green Close care home in Drakes Avenue to make way for the development.

Its five-figure offer towards off-site ‘affordable’ housing was slammed as an ‘insult to Sidmouth’ by town councillors, who suggested the developer should pay at least £360,000.

After failing to reach an agreement with East Devon District Council (EDDC), Churchill launched an appeal due to non-determination of its application.

Papers submitted to the appeal process from EDDC say there is a policy expectation that half of the site should be provided as ‘affordable’ housing and that there is a ‘substantial’ need for one- and two-bedroom units in Sidmouth.

If 18 ‘affordable’ homes cannot be provided on-site, a payment of £935,201 would be expected so the properties can be built elsewhere.

Churchill said a viability assessment showed building ‘affordable’ homes on the site was ‘impractical’ and ‘unrealistic’.

It added: “It has been demonstrated that the application development is not sufficiently viable to permit the imposition of any affordable housing or planning gain contributions above £41,208.”

An EDDC spokeswoman said: “Unfortunately, the development is not sufficiently viable to pay this [£935,201] sum and, following an independent assessment of the viability of the scheme, it was reluctantly accepted that the scheme could only afford to pay £41,208 towards affordable housing.

“Under government guidance, we are required to reduce our requirements where a development is unviable and so we have no real choice but to accept this position.”

EDDC also expected Churchill to pay £22,536 for habitat mitigation, plus an £18,400 public open space contribution. The total is nearly £1million.

The delay in EDDC deciding the fate of the application was due to officers trying to apply an ‘overage’ clause that would require Churchill to pay up if its profits exceed current expectations.

A Planning Inspectorate spokesman confirmed that the appeal had been validated and it is in discussion with both parties.”

http://www.sidmouthherald.co.uk/news/eddc-wants-1million-in-community-cash-developer-offers-40-000-1-5084604