EDF can’t manage its French sites, let alone Hinkley C

So, so nany of Devon’s economic eggs in Hinkley C’s basket – dropped in there by our Local Enterprise Partnership, with the vested interests of its board members uppermost.

And no wonder Germany has dropped nuclear in favour of renewable energy.

“An official report rapped French energy giant EDF on the knuckles Monday for lacking a “culture of quality,” as reflected in huge delays and price overruns at a nuclear plant it has been building for more than a decade.

The report was presented to EDF’s largest shareholder, the French government, which called for an urgent “plan of action” to improve standards at the company and get the much-needed plant online.

The delays at the Flamanville site in northern France come on top of a massive cost overrun at the Hinkley Point nuclear project EDF is building in Britain and a decade-long delay to the Olkiluoto plant in Finland.

EDF’s European Pressurised Reactor (EPR) reactor in Flamanville is now seven years late and costs have more than tripled to 12.4 billion euros ($13.7 billion).

Earlier this month, the company said fixing faulty welding on the Flamanville reactor will add 1.5 billion euros ($1.6 billion) to the already swollen price tag.

When Electricite de France began work on the reactor in 2007 it targeted a launch date of 2012. It is now eyeing 2022.

Presented by Jean-Martin Folz, ex-boss of car-maker PSA, Monday’s audit report highlighted a loss of competence at EDF and slammed the company for lacking a “culture of quality.”

Economy Minister Bruno Le Maire said the report underscored “an unacceptable lack of rigour” at EDF.

He ordered the company to put in place an action plan within a month to bring its nuclear project to the “highest levels”.

EDF chief executive Jean-Bernard Levy, at the same press conference, said he accepted the findings and vowed the company would “redouble its efforts” to boost skill levels.

Folz said that in spite of the problems, the EPR project has successfully demonstrated the “relevance” of the new technology.

– Frustration –

The EDF’s board a few months ago discussed abandoning the Flamanville project but the French state still supports the build despite frustration with the delays.

The project was meant to showcase the third-generation EPR reactor technology that EDF has sold to Britain and Finland.

In September, EDF announced that an EPR reactor it is building on Britain’s south coast would also be delayed, and cost between 1.9 and 2.9 billion pounds ($2.4-3.7 billion) more than initially estimated.

A similar EPR third generation nuclear power plant project in Olkiluoto in Finland is now 10 years behind the initial schedule.

The government acknowledges the delays risk severely denting France’s international reputation as a reliable provider of nuclear energy technology.

Folz said EDF would need to embark on a massive investment and recruitment drive, which was only possible if the government commits to “stable, long-term programmes for the construction of new reactors and the maintenance of the existing fleet.”

The state is considering building more reactors but Environment Minister Elisabeth Borne insisted Monday a decision cannot be taken before EDF has demonstrated the effective running of the EPR.

France relies on nuclear power for 72 percent of its electricity needs. The government wants to reduce this to 50 percent by 2035 by developing more renewable energy sources.

The government has said it would shut 14 of 58 reactors, spread across 19 power plants, by 2035.

But France, by far the country most reliant on nuclear energy, has no intention of phasing this source out altogether, like Germany.

The nuclear sector provides jobs for nearly a quarter of a million people.

Two reactors in Fassenheim in the east of the country are still online despite a 40-year lifespan that expired two years ago.

Last year, a parliamentary report highlighted failings in the safety and defences of the country’s nuclear plants, citing a series of shutdowns at sites around the country.”

https://www.france24.com/en/20191028-audit-raps-french-energy-giant-edf-over-nuclear-project

“Surge in voter registration applications as Boris Johnson pushes for December general election”

“Nearly 60 per cent of applications were from people aged 34 and under 34. …”

https://www.independent.co.uk/news/uk/politics/boris-johnson-news-latest-general-election-voter-registration-applications-a9174526.html

Are you one one of them? If not register at:

https://www.gov.uk/register-to-vote

 

“Trump’s Plan for the NHS” on TV tonight, Channel 4, 8 pm

Tonight Channel 4 Dispatches, 8 pm:

“Antony Barnett investigates how a future trade deal with President Trump’s America might leave the NHS footing a bill for billions, with less money for UK healthcare. US drug giants are lobbying negotiators to make the NHS pay more for medicines.”

“ALTERNATIVE LOCAL VISION FOR QUEEN’S DRIVE”

Press Release

“Challenged by EDDC to come up with a solution for the development of Phase 3 Queen’s Drive, Councillor Nick Hookway and a team of committed local residents present their scheme to the Delivery Group at EDDC on Monday 28th October.

Highlight of the costed plan include a free play area for the under 8s and an innovative pay play area with high ropes, water wars and climbing towers for older children and adults.

The vision is to create a destination that will complement the Watersports Centre and Restaurant offer on phase2 and will cater for all age groups, all abilities and huge variety of interests. It is backed by research into current trends in the leisure industry, the experience of other seaside towns in England and surveys carried out by locals and HemingwayDesign.

In addition to the play areas there are plans for an intimate arts/performance space for hire, a sunken garden where the Swans used to be and a gift shop and café. The educational feature of the scheme is an interactive Discovery Centre telling the story of our unique coastline and estuary. Fronting the site a brand new Crazy Golf.

All this will be delivered by a not for profit organisation so that community benefit will be felt by local residents. Councillor Hookway will be asking EDDC that these proposals will be given equal opportunity alongside Hemingway Design so that the Town can decide what happens on the Seafront.”

and here:

https://www.devonlive.com/whats-on/alternative-vision-exmouth-seafront-site-3476360

More flack for EDDC Leader Ingram on spending and transparency

Not looking good … now being attacked for  wanting to employ consultants to tell him what town centre problems are:

“East Devon District Council ‘lacks good detailed intelligence about its towns and their economic wellbeing’.

Cllr Ben Ingham, leader of the council, admitted: “This is not a good state of affairs,” when questioned at Wednesday night’s full council meeting.

It came after Cllr Mike Allen asked questions over the decision of the portfolio holder for economy, Cllr Kevin Blakey, to commission a major study into town centres.

Cllr Allen asked for an indication of the cost proposed and in the interests of proper transparency, for the Consultancy brief envisaged be put to the next Overview Committee for discussion before any expenditure is committed. …”

https://www.devonlive.com/news/devon-news/east-devon-lacks-good-intelligence-3474769

“Leader says in hindsight, notes should have been taken when CEO met developers”

Owl says: Well, duh! And just how long has EDDC’s CEO been in the job? Where was his “hindsight”?.

And our “Leader” is now fully au-fait with the language if the previous majority party as far as giving non-answers is concerned!

Everything changes, nothing changes …

“At last Wednesday’s full council meeting, Cllr John Loudoun, asked questions around the keeping of notes from meetings that officers of the council are involved in.

Notes of meetings when senior council officers meet with developers over planning issues should be made in future, councillors have been told.

It follows an instance where East Devon District Council’s chief executive allegedly told developers to appeal his own council’s refusal of planning permission for the Sidford Business Park.

Paragraphs 13 and 14 of the Richard Kimblin QC final closing arguments at a planning inquiry held this said: “After the 2016 application was refused, there was a meeting with Councillor Stuart Hughes and the CEO of the Council. The CEO advised that the way to progress was to appeal. That is an extraordinary state of affairs.”

The claims, made both in writing and verbally, were unchallenged by East Devon District Council during the inquiry, but afterwards, an East Devon District Council spokesman said that Mr Williams did not advise the appellant of anything but the applicant chose to interpret the comments he did make as encouraging an appeal, and the comments were made in a ‘situation where a degree of hyperbole and exaggeration is not unusual’.

At last Wednesday’s full council meeting, Cllr John Loudoun, asked questions around the keeping of notes from meetings that officers of the council are involved in.

He said: “Sometimes officers from this Council, beyond those directly responsible for local planning matters, meet and/or discuss with developers their planning applications. Sometimes these meetings take place to discuss applications that this Council has failed to support.

“Does the leader of the council agree with me that when such meetings and/or discussions take place, it is most imperative that they are held in ways that give residents faith that the Officers are transparent and accountable in these matters?

“Does the leader agree with me that it would be appropriate that at such meetings, or in such discussions, there should be more than one Officer present, such as a legal adviser and/or planning officer? Do you agree that any meetings or discussion with developers when they relate to planning should have a formal record kept of what was discussed and agreed, and why?”

In response, Cllr Ben Ingham, leader of the council, said: “The circumstances surrounding any meeting will determine whether it is necessary for them to be held in any particular way. I have the upmost faith that our officers would appreciate the need to act in a way that ensures nothing untoward occurs.

“But in hindsight, it is probably a very good advice and many members and officers of the council may say in future they will.”

It was of a number of questions raised at the meeting relating to concerns about the processes of the council which followed what some councillors called the ‘shambles’ of the previous full council meeting which left councillors unclear as to what they were voting for.

Cllr Loudoun added: “At the last Full Council meeting there was lengthy debate around a motion. A Member at one point interjected and proposed ‘that the question now be put’ and the chairman put this point of order to the meeting.

“Many members did not fully appreciate the implications of voting for or against this point of order and when passed by a show of hands, there appeared to be confusion amongst some Members as to what had just been agreed. When the chairman invited the meeting to vote on the motion on the agenda paper, some Members appeared not to understand what was happening and what they were now being asked to vote on.

Once the meeting had voted on the motion some Members were confused and it was only at this point that it was fully explained what had happened and the implications of their first vote, but by this point the votes had been cast and decisions made.

“The meeting ended with some Members expressing frustration and/or confusion about what the meeting had decided. Does the Leader recognise this set of events and if he does, what would he recommend this Council does to avoid a similar set of circumstances occurring in the future?”

In response, Cllr Ingham said: “It is not for me to say what other members may or may not have understood. I understood what was happening but members are always able to ask for confirmation on what is going on and I am sure the Chairman would, in such circumstances, ensure that clarity was given on the procedures from the officers present. We have may acted at a speed that was not appropriate for new members.”

Asked by Cllr Paul Millar on the potential merits of ensuring Members can make informed decisions when asked to vote in Council meetings, Cllr Ingham said that any council or committee makes mistakes, but as the new council learns, he hopes members and officers will make fewer mistakes when acting in a hurry.

Cllr Eleanor Rylance also questioned why a significant number of meetings had been scheduled to take place during the half-term break. As well as the full council meeting, a Strategic Planning Committee, an Audit and Governance Committee, and a Scrutiny Committee meeting took place last week.

She said: “In the spirit of inclusivity, how is it that this council is wilfully disadvantaging anyone with school aged children, caring responsibilities for school aged children, or those who work in schools or other educational establishments, by organising major meetings including this one during school half term? This is entirely avoidable. Please can the council set its timetable with school dates in mind in the future?”

In response, Cllr Ingham said: “Whilst it would clearly be difficult to plan a yearly meeting cycle to accommodate school holidays, particularly bearing in mind the length of the summer holiday and the potential impact on the business of the Council, it would be helpful to consider if changes could be made in future. “

https://www.devonlive.com/news/devon-news/leader-says-hindsight-notes-should-3475242

East Devon: fourth fastest aging population in the country

“Parts of the UK are ageing twice as fast as other areas of the country, while in some cities the population is getting younger, a divergence that will have a lasting impact on local economies, local government and national politics, according to new research. …

https://www.theguardian.com/science/2019/oct/28/some-parts-of-uk-ageing-twice-as-fast-as-others-new-research-finds?CMP=Share_iOSApp_Other

The research is here:
resolutionfoundation.org

How company debt (and greed and tax avoidance) will sink us all

“Corporate addition to high debt threatens to destabilise the world economy. Not my words – those of the International Monetary Fund.

A recent report by the IMF says that “in a material economic slowdown scenario, half as severe as the global financial crisis, corporate debt-at-risk could rise to $19 trillion —or nearly 40 percent of total corporate debt in major economies—above [2008] crisis levels.”

In other words, in an economic slowdown, many firms will be unable to cover even their interest expenses with their earnings. Countries most at risk are US, China, Japan, Germany, Britain, France, Italy and Spain.

One study estimated that in 2018 UK s FTSE 100 companies alone had debt of £406bn.

Sinking in debt

Low interest rates have persuaded companies to pile-up debt in the belief that they will be able to use it to maximise shareholder returns. The key to this is tax relief on interest payments.

Ordinary folk don’t get tax relief on interest payments for mortgages or anything else because successive governments argued that such reliefs distort markets and encourage irresponsible behaviour.

However, corporations get tax relief on all interest payments. Currently for every £100 of interest payment, companies get tax relief of 19%, the prevailing rate of corporation tax, which reduces the net cost to £81. The tax subsidy enables companies to report higher profits.

Companies do not necessarily use debt to finance investment in productive assets. The UK languishes near the bottom of the major advanced economies league table for investment in productive assets and also lags in research and development expenditure.

British companies appease stock markets by paying almost the highest proportion of their earnings as dividends. BHS famously borrowed £1 billion to pay a dividend of £1.3bn. Carillion used its debt to finance executive pay and dividends. Thomas Cook had at least £1.7bn of debt but that did not stop lavish executive pay and bonuses.

Fatal effects

Corporate debt facilitates profiteering and tax avoidance. Water companies have long used ‘intragroup debt‘ to dodge taxes. Typically, they borrow money from an affiliate in a low/no tax jurisdiction. The UK-based company pays interest which qualifies for tax relief and reduces the UK tax liability.

Many a tax haven either does not levy corporation tax or exempts foreign profits from its tax regime. As a result, the affiliate receives the interest payment tax free.

It is important to note that the company is effectively paying interest to another member of the group and no cash leaves the group. The inclusion of interest payments in the paying company’s cost base can also enable it to push up charges to customers, especially if has monopoly rights on supply of goods and services.

Thames Water is an interesting example here. From 2006 to 2017, it was owned by Macquarie Bank and operated through a labyrinth of companies, with some registered in Caymans.

During the period, Thames’ debt increased from £2.4bn to £10bn, mostly from tax haven affiliates, and interest payments swelled the charges for customers. Macquarie and its investors made returns of between 15.5% and 19% a year.

For the period 2007 to 2015, the company’s accounts show that it paid £3.186bn in interest to other entities in the group alone. Tax relief on interest payments reduced UK corporate tax liability. For the years 2007-2016, Thames Water paid about £100,000 in corporation tax.

Private equity entities use debt to secure control of companies and engage in asset-stripping. A good example is the demise of Bernard Mathews, a poultry company.

In 2013, Rutland Partners acquired the company and loaded it with debt, which carried an interest rate of 20%. This debt was secured which meant that in the event of bankruptcy Rutland and its backers would be paid before unsecured creditors.

In 2016, Bernard Matthews’ directors, appointed by Rutland, decided that the business was no longer viable and sought to sell it. However, they only sold the assets of the company which realised enough to pay secured creditors, Rutland and banks.

The big losers were unsecured creditors, which included employee pension scheme, HMRC and suppliers. The purchaser of the assets told the House of Commons Work and Pensions Committee that it offered to buy the whole company, including its liabilities, but the offer was declined by Rutland because by dumping liabilities it collected a higher amount.

What needs to change

There is some recognition that corporate addiction to debt poses a threat to the economy. Following recommendations by the Organisation for Economic Co-operation and Development, the UK has placed some restrictions on the tax relief for interest payments, but that is not enough.

An independent enforcer of company law is needed to ensure that companies maintain adequate capital. Companies need workers on boards to ensure that directors do not squander corporate resources on unwarranted dividends and executive pay.

The insolvency laws need to be reformed to ensure that secured creditors can’t walk away with almost all of the proceeds from the sale of assets and dump liabilities.

And finally, tax relief on debt needs to be abolished altogether.”

https://leftfootforward.org/2019/10/prem-sikka-how-companies-use-debt-to-line-their-pockets/