Auditors lambast Hinkley Point deal

UK government plans for a new £18bn nuclear power station have come under fire from public auditors, who call it “a risky and expensive project”.

The case for the Hinkley Point C plant in Somerset was “marginal” and the deal was “not value for money”, according to the National Audit Office (NAO).

The NAO said the government had not sufficiently considered the costs and risks for consumers.

It added that consumers were “locked in” to years of paying for the plant.

The report comes nine months after the government granted final approval for the project, which is being financed by the French and Chinese governments.

State-controlled French energy firm EDF is funding two-thirds of the project, which will create more than 25,000 jobs, with China investing the remaining £6bn.

Critics of the deal have warned of escalating costs and the implications of allowing nuclear power plants to be built in the UK by foreign governments.

The NAO’s report centred on the role of the Department for Business, Energy and Industrial Strategy (BEIS) in finalising the deal in 2016.

At the time, said the NAO, the department’s own value-for-money tests showed “the economic case for Hinkley Point C was marginal and subject to significant uncertainty”.


“But the Department’s capacity to take alternative approaches to the deal were limited after it had agreed terms,” the NAO added.

“The government has increasingly emphasised Hinkley Point C’s unquantified strategic benefits, but it has little control over these and no plan yet in place to realise them.”

In response to the report, a BEIS spokesperson said building the plant was “an important strategic decision to ensure that nuclear is part of a diverse energy mix”.

The department said the project would provide “clean, reliable electricity powering six million homes and creating more than 26,000 jobs and apprenticeships in the process”.

EDF Energy said the plant “remains good value for consumers compared with alternative choices”.

The firm added: “Consumers won’t pay a penny until the power station is operating and it is EDF Energy and [China’s] CGN who will take the risk and responsibility of delivering it.

“The project is having a major impact on the UK’s industrial capacity, jobs and skills. Relaunching the UK nuclear new build industry at Hinkley Point C will enable costs for future projects, in particular Sizewell C, to be lower.”

The Nuclear Industry Association (NIA) said the report showed that the plant was “competitive with other low-carbon projects” and that “alternatives would cost more”.

However, NIA chief executive Tom Greatrex added: “The NAO analysis of the strike price also highlights that using a different financing structure could have resulted in a lower strike price.

“That is something government should reflect on as other new nuclear projects advance.”

Hinkley Point deal ‘risky and expensive’

UK government plans for a new £18bn nuclear power station have come under fire from public auditors, who call it “a risky and expensive project”.

The case for the Hinkley Point C plant in Somerset was “marginal” and the deal was “not value for money”, according to the National Audit Office (NAO).

The NAO said the government had not sufficiently considered the costs and risks for consumers.

It added that consumers were “locked in” to years of paying for the plant.

The report comes nine months after the government granted final approval for the project, which is being financed by the French and Chinese governments.

State-controlled French energy firm EDF is funding two-thirds of the project, which will create more than 25,000 jobs, with China investing the remaining £6bn.

Critics of the deal have warned of escalating costs and the implications of allowing nuclear power plants to be built in the UK by foreign governments.

The NAO’s report centred on the role of the Department for Business, Energy and Industrial Strategy (BEIS) in finalising the deal in 2016.

At the time, said the NAO, the department’s own value-for-money tests showed “the economic case for Hinkley Point C was marginal and subject to significant uncertainty”.


“But the Department’s capacity to take alternative approaches to the deal were limited after it had agreed terms,” the NAO added.

“The government has increasingly emphasised Hinkley Point C’s unquantified strategic benefits, but it has little control over these and no plan yet in place to realise them.”

In response to the report, a BEIS spokesperson said building the plant was “an important strategic decision to ensure that nuclear is part of a diverse energy mix”.

The department said the project would provide “clean, reliable electricity powering six million homes and creating more than 26,000 jobs and apprenticeships in the process”.

EDF Energy said the plant “remains good value for consumers compared with alternative choices”.

The firm added: “Consumers won’t pay a penny until the power station is operating and it is EDF Energy and [China’s] CGN who will take the risk and responsibility of delivering it.

“The project is having a major impact on the UK’s industrial capacity, jobs and skills. Relaunching the UK nuclear new build industry at Hinkley Point C will enable costs for future projects, in particular Sizewell C, to be lower.”

The Nuclear Industry Association (NIA) said the report showed that the plant was “competitive with other low-carbon projects” and that “alternatives would cost more”.

However, NIA chief executive Tom Greatrex added: “The NAO analysis of the strike price also highlights that using a different financing structure could have resulted in a lower strike price.

“That is something government should reflect on as other new nuclear projects advance.”

New railway connection to London Luton Airport approved

London Luton Airport is to get a new railway station so that trains can run directly to the terminal.

A 1.4-mile (2.2km) rail line will be built to the existing Luton Airport Parkway station, replacing the current bus shuttle service.

The £200m plans have been approved by Luton Borough Council and the station is due to open by the end of 2020.

It is hoped that passengers will be able to travel between the airport and London in under half an hour.

Current journeys from London to the parkway station take at least 20 minutes with passengers then having to wait for a shuttle bus which takes at least a further ten minutes, traffic permitting.


It is part of a major redevelopment of the airport which also includes improvements to surrounding roads and layout of the terminal.

London Luton is the fifth-busiest airport in the UK, handling 14.6m passengers last year, and the airport is predicting that will increase to 18m by 2020.

Labour Cllr Dave Taylor, chair of planning at Luton Borough Council, said: “It’s an exciting development which will enhance the passenger experience at Luton.

“It was approved by all three parties on the council, unanimously, because the airport is a success story for the town and this improves the accessibility to it.”

Qatar wants 10% of American Airlines

American Airlines aircraft

American Airlines has received an “unsolicited” approach from Qatar Airways which wants to acquire 10% of the US company.

In a regulatory filing American Airlines said Qatar intended to purchase at least $808m (£638m) of its shares.

American Airlines said it would respond “in due course”.

Shares in American Airlines, which is the biggest airline in the world, are up 5% in pre-market trading.

China raises heat over foreign investment

Molineux

Shares in two of China’s biggest conglomerates, Fosun International and HNA, fell by about 6% on Thursday, amid rumours that banks had been ordered to assess their loan exposure to them.

Fosun bought Wolverhampton Wanderers football club last year, while HNA is Deutsche Bank’s biggest shareholder.

Reports said the banking regulator had also told lenders to investigate loans to Anbang Insurance, Odeon UK cinema owner Dalian Wanda and Zhejiang Luosen.

All five are big overseas investors.

The conglomerates’ other high profile acquisitions include Zhejiang Luosen buying AC Milan football club earlier this year.

HNA also owns airport services firm Swissport and airline caterer Gate Gourmet, and it has a 25% share in Hilton.

Anbang owns New York’s Waldorf Astoria hotel.

Dalian Wanda’s film division is the world’s biggest cinema operator, and also owns the UCI chains in the UK.

Trading in Wanda Film Holding’s shares was suspended after they fell by nearly 10% in Thursday trading. The company subsequently denied as “malicious speculation” rumours that some banks were offloading the company’s bonds.

It said the shares would resume trading on Friday.

The China Banking Regulatory Commission (CBRC) had told lenders to conduct internal assessments of their credit-risk exposure to acquisitive companies, according to.

The CBRC has been attempting to stem the flow of money leaving China.

Last year China’s companies invested $225bn (£178bn) overseas. The outflow has put pressure on the currency, the renminbi, and drained foreign exchange reserves.

RAF Marham: MoD to spend £135m on F-35 jets airbase

F-35B flying over Marham

A multimillion-pound contract to support the new fast jets at RAF Marham in Norfolk has been unveiled.

The Ministry of Defence is investing £135m in new facilities in preparation for the arrival of the F-35B Lightning II aircraft next year.

The money will pay for a new hangar to house 12 of the jets and and provide vertical landing pads.

Two existing runways and taxiways will be resurfaced.

Defence Secretary Sir Michael Fallon said: “This contract will ensure that RAF Marham has the facilities to match this world-class aircraft when it arrives next year.


“Throughout the F-35 programme, British firms have won major contracts creating thousands of jobs.

“The contract to improve the runways and taxiways as well as installing new landing pads will bring local jobs to Marham.”

Last year it was announced the government was investing £167m in centres for aircraft training and maintenance at RAF Marham.

Due to open in 2018, three new buildings on the site will provide training facilities for pilots and ground crews.

Single parents win benefits cap High Court challenge

Man with pushchair

Single parents with a child under two have won a court challenge as they face “real misery” from the government’s benefits cap.

A High Court judge said the cap was not intended to cover such households, had “no good purpose”, and the failure to exempt them was discriminatory.

The government said it intended to appeal and there would be no change to the cap while this process was ongoing.

The cap limits the income households receive in certain benefits.

It stands at £23,000 for those in London and £20,000 a year outside London. Parents must work for at least 16 hours a week to avoid the cap.

The ruling was made in response to a judicial review brought by four lone parent families – including two who had been made homeless owing to domestic violence. Their solicitor said their benefits were, or were expected to be, cut as they were unable to work the 16 hours.

A judge in London ruled on Thursday that he was “satisfied that the claims must succeed” against the work and pensions secretary.

Mr Justice Collins said: “Whether or not the defendant accepts my judgment, the evidence shows that the cap is capable of real damage to individuals such as the claimants.

“They are not workshy but find it, because of the care difficulties, impossible to comply with the work requirement.

“Most lone parents with children under two are not the sort of households the cap was intended to cover and, since they will depend on DHP (Discretionary Housing Payments), they will remain benefit households.

“Real misery is being caused to no good purpose.”

Rebekah Carrier, who represented some families, said: “The benefit cap has had a catastrophic impact upon vulnerable lone parent families and children across the country.

“Single mothers like my clients have been forced into homelessness and reliance on food banks as a result of the benefit cap.

“Thousands of children have been forced into poverty, which has severe long-term effects on the health and well-being.”

A spokesman for the Department for Work and Pensions (DWP) said the government was “disappointed” with the decision and intended to appeal.

“Work is the best way to raise living standards, and many parents with young children are employed,” he said.

“The benefit cap incentivises work, even if it’s part-time, as anyone eligible for working tax credits or the equivalent under Universal Credit, is exempt. Even with the cap, lone parents can still receive benefits up to the equivalent salary of £25,000, or £29,000 in London and we have made Discretionary Housing Payments available to people who need extra help.”

He said that households with young babies were among the groups that such housing payments were specifically aimed to assist.

The department said the benefits cap remained in place while the appeal process continued.

Alison Garnham, chief executive of Child Poverty Action Group, said: “We have the ridiculous situation where one part of the DWP has been telling lone parents with very young children that it understands they should not be expected to work, and another part of the DWP is punishing them severely for exactly the same thing.”

CMA clears Standard Life-Aberdeen Asset Management merger

Stock trading board

Britain’s competition watchdog has given the green light to the £11bn merger of Standard Life and Aberdeen Asset Management.

The Competition and Markets Authority (CMA) said it had decided not to refer the tie-up to an in-depth investigation.

The decision paves the way for the deal’s completion in August.

The merger will create Europe’s second-biggest fund manager, with £670bn under management.

The enlarged company, to be called Standard Life Aberdeen, will be headed up by Keith Skeoch and Aberdeen boss Martin Gilbert.

On Monday, investors in both firms during general meetings.

The deal, announced in March, is targeting cost savings of £200m a year, with about 800 jobs expected to be lost over a three-year period from a global workforce of 9,000.

In a joint announcement on Thursday, the companies said: “Standard Life and Aberdeen note the announcement today by the CMA that it has completed its review of their proposed merger and has cleared the transaction unconditionally.

“The transaction is currently expected to complete on 14 August 2017, subject to remaining regulatory approvals.”

Imagination Technologies put up for sale amid Apple dispute

iPhone

UK chip designer Imagination Technologies – which is in dispute with Apple, its largest customer – has put itself up for sale.

Shares in the company more than halved in April when Imagination said that Apple was to stop using its technology.

The US company uses the UK firm’s chip technology in its iPhones, iPads, and iPods under a licensing agreement.

it had received interest from suitors in recent weeks so had begun a formal sale process.

It added it was now in preliminary talks with potential bidders.

In April, that Apple, which accounts for about half of Imagination’s revenues, was planning to stop using its technology within “15 months to two years”.

At the time, it questioned whether Apple would be able to develop its own computer chip designs without breaching Imagination’s patents.

Last month, it had started a dispute resolution procedure with Apple over licensing payments.

In its latest update, the company said it remained “in dispute” with Apple.

Separately, Imagination said the sale process for its MIPS and Ensigma businesses – which was announced in May – was “progressing well”, with indicative proposals received for both units.

News of the sale sent shares in Imagination up 15% in early trade to 142p. However, the share price still remains nearly 50% below the level it was at before Imagination announced it was being dropped by Apple.

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Imagination Technologies Group

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  • 145.0p
    Current price
  • 17.41%
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  • 21.5p
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HS2 franchise: Bidder shortlist revealed

HS2 impression

The companies bidding for the West Coast Partnership rail franchise, which will design and run the HS2 high speed services between London and Birmingham, have been revealed.

The said First Trenitalia West Coast, MTR West Coast Partnership and West Coast Partnership had all been shortlisted.

The franchise will also be responsible for the West Coast Main Line.

Four bidders for the South Eastern franchise have also been announced.

In the case of the West Coast Partnership franchise all three bidders have a non-British partner.

The winner will be “expected to work with HS2 Ltd to launch the first service on HS2”, said the DfT.

Transport Secretary Chris Grayling said the West Coast Partnership would help to “ensure that HS2 becomes the backbone of Britain’s railways”.

is a new rail franchise which will combine the current InterCity West Coast main line with the planned HS2 high-speed services.

The operator will be responsible for services on both the West Coast main line from 2019 and running the initial HS2 services in 2026.

The West Coast franchise is currently run by Virgin Trains as a joint venture between Stagecoach and Virgin.

First Trenitalia West Coast is a joint venture between First Rail Holdings and Italy’s Trenitalia. Earlier this year it took on the C2C rail franchise.

MTR West Coast Partnership is a joint venture between Hong Kong’s MTR Corporation and China’s Guangshen Railway Company.

West Coast Partnership is a joint venture between Stagecoach Group, Virgin Holdings Ltd and France’s SNCF C3.


HS2 will run between London and Birmingham.

Construction will begin later this year and it is expected to reduce rail times between Birmingham and London by 32 minutes.

A second Y-shaped phase of HS2 will open in two stages.

The line from Birmingham to Crewe will launch in 2027, with the remaining construction – which includes a spur taking HS2 to a new station at Manchester Airport – due to finish six years later.

There are four companies on the shortlist for the next South Eastern franchise, which Mr Graylng described as “one of the busiest” in the UK, running nearly 2,000 services every weekday.

  • South Eastern Holdings is a joint venture company which, on franchise award, will be wholly owned by Abellio Transport Group and East Japan Railway and Mitsui & Co.
  • London and South East Passenger Rail Services, a wholly owned subsidiary of Govia.
  • Stagecoach South Eastern Trains which is a wholly owned subsidiary of Stagecoach Group.
  • And Trenitalia is also bidding for the South Eastern franchise.