The Quandary of State Steering v Neo-Liberal Thinking: The Case of Nuclear Power Policies in the UK, 1979-2015
Since 2005, the United Kingdom has joined many nations across the world on the path towards a nuclear Renaissance. In the backdrop of growing concerns over oil prices, dwindling domestic gas resources and the very limited development of renewables, the Blair government decided in 2005 to embrace nuclear power as a means to secure and stabilise its future energy balance and security. Launching new nuclear build has however proven a major task for the UK government as the Blair, Brown and Coalition governments have, one after the other, pledged that the neo-liberal consensus wouldn’t be broken and that future private nuclear contractors and operators wouldn’t receive any form of special treatment, nor direct public subsidies.
Such commitments are inherited from the neo-liberal consensus which has prevailed in Britain since the major economic reforms introduced during the Thatcherian years. Today often considered as the paragon of a neo-liberal model, Britain then underwent many structural and regulatory changes aimed at steering the country towards a more open-market economy under Margaret Thatcher and John Major’s governments. Towards the end of the 1980s, many key public sectors were thus transferred under private ownership and others subjected to intricate new forms of public-private partnerships. The national nuclear industry, which had previously strived under public ownership, made no exception. Through these processes of marketization and streamlining of public administration - since then encapsulated in the famous phrase “hollowing out of the State” - private actors undoubtedly increased their sway over key industrial sectors, including the national nuclear industry. To many scholars, such radical transformations to the economic fabric of the country embodied an enduring shift towards a market-based economic system, thus weakening the institutional centre, as the State - both willingly and unwillingly - relinquished many of its tools of influence over its economic structure and saw its sphere of influence shrink.
As a consequence, scholars’ interest in the analysis of the State as both an institution and a conceptual instrument has seemingly receded since the 1980s. To Rhodes and Bevir (2003), such transformations, which have been to a large extent upheld under the subsequent Labour governments, have been symptomatic of the emergence of a new model in state capacity, which they called the dynamics of governance. In the wake of Rhodes’ theory of the weakening of the State, many scholars (Baker and Stoker: 2011) and economists (Robinson: 2013) have concluded that a British Nuclear Renaissance would be impossible to achieve without a return to direct State intervention in nuclear regulation. And yet. Today, two prospective sites are well under way, thereby questioning the previously mentioned assessment.
Economic regulation and contracting in British nuclear power policies is here taken as a case in point to put this theory of the waning influence of the State over industrial policies to the test. Drawing on the traditional theories of government instruments designed by Hood (1986) and Howlett (2005), the aim is to identify the traditional and more modern tools the UK State has had at its disposal to preserve and sustain its capacity at influencing its domestic nuclear policies, and to confront them to their immediate and more long-term context of emergence. By analysing legislation, official documents and interviews with private nuclear actors, the purpose of this analysis is to put State instruments back into historical perspective in order to determine how they have been shaped and constrained by previous economic decisions. Such historical analysis will help identify three major phases of State involvement in nuclear regulation.
Firstly, from the advent of the Conservative era in 1979 to its end in 1997, the UK nuclear power industry experienced major structuring and regulation changes, culminating with its partial privatisation and implosion at the beginning of the 1990s. At first sight, the declining presence of the UK State in an industrial sector, which had previously been strongly under the State’s protection, seems to tally with Rhodes’ theory of the weakening of State capacity.
Secondly, the Labour governments from 1997 to 2010 have pursued Thatcher’s agenda of rolling back the limits of state intervention in industrial policies as market-based measures were introduced in nuclear regulation, including for instance the development of “government-owned, contractor-operated” entities. However, this analysis will also help reveal that the wave of privatisation and sub-contracting policies enforced under the Major and Blair governments haven’t actually been synonymous with a total collapse of State intervention in nuclear regulation.
Finally, we will show that the Nuclear Renaissance has encouraged – or forced – the UK government to multiply indirect forms of guarantees to foster public investments in new nuclear build, while still trying to remain truthful to its commitment of not directly subsidising the new nuclear power plants. Since the end of the 2010s, indirect forms of State control through insurance schemes and more recently the introduction of a thirty-year floor price for the electricity which will be produced by the major private investor and constructor EDF Energy, have been introduced.
This study will therefore show that the current regulation mode for nuclear policies has resulted from historical compromises between ideological and political changes on the one hand, and often diverging and unstable economic constraints on the other hand. In the face of growing environmental concerns since the end of the 20th century for instance, the market-based regulation system has thus given way to more original and hybrid state regulation measures, including neo-corporatist and neo-Keynesian practices. All in all, this analysis will not only help understand the modern, intricate relationship between the State and the private actors operating in public interest sectors, but will also reveal that neo-liberal ideas aren’t necessarily incompatible with strong forms of state intervention in industrial regulation. By embodying the UK State’s resilience in its nuclear policies, this analysis therefore participates in updating the current theoretical models of state capacity in neo-liberal economies.