The real questions about the UK government’s decision to cancel the Swansea Bay Tidal Lagoon

An artist’s impression of the tidal lagoon. Image: Tidal Lagoon Power.

The UK government’s refusal to support the Swansea Bay Tidal Lagoon pathfinder project says much about how Britain proposes to face the challenges of the 21st century. Although the decision was widely expected, it still came as a severe blow to the communities in and around Swansea Bay.

But over and above the local reaction, the decision speaks volumes about the UK government’s commitment to three larger questions: mission-led innovation, rebalancing the UK economy and sustainable development.

Thanks to the popularity of Mariana Mazzucato’s work on mission-led innovation policy, the UK government has adopted this rhetoric when presenting its industrial strategy to support the technologies and industries of the future. At the heart of the new industrial policy paradigm is a joint effort between governments and business to engage in a constant dialogue to generate information about the scope for, and the barriers to, innovation. Governments play an enormously important role in catalysing new technologies and helping launch new industries by mitigating risk, an important consideration when dealing with sectors like renewable energy.

A map of the proposed project. Image: Atkins Global.

Given the need for close collaboration between government and industry, the most extraordinary aspect of the SBTL saga is that, according to Keith Clarke, the chairman of Tidal Lagoon Power, the company behind the project had heard “next to nothing” from the UK government for the past two years. So where was the partnership approach that ought to lie at the heart of mission-led innovation policy? 

The Swansea Bay Tidal Lagoon was described as a “no regrets” project by the Hendry Review that was commissioned by the same department that rejected the project last week. The Review concluded that tidal lagoons would help to deliver security of energy supply; help meet our decarbonisation commitments; and stimulate a new UK industry. The cost of a small scale pathfinder project would be about 30p per UK household per year over the first 30 years.

But the costs and the risks need to be framed over a 120 year lifespan, which makes it a totally different proposition to wind and solar (which have shorter operational lives) and nuclear (which has large waste disposal costs) – all problems that are absent from the tidal option.

The compelling vision of tidal lagoons is that the Swansea pathfinder was designed to be the first in a series of larger lagoons in which costs would certainly have decreased – as Charles Hendry suggested – through scale effects and through learning-by-doing. The UK government thus seems to have lost its ambition for mission-led innovation in the renewable energy sector.


Another policy to which the UK government is ostensibly committed is the rebalancing of the economy. This commitment was widely interpreted to mean sectoral and spatial rebalancing to render the UK less dependent on sectors like financial services and less tilted to South East England. The SBTL project was an ideal candidate to meet these twin goals because it both created a new global industry (with manufacturing located across the UK), and is located in West Wales, a “less developed region” in the EU regional classification. Creating a new industry in an old industrial region would have signalled that the UK government was genuinely committed to rebalancing the economy ahead of Brexit – but there is little evidence to suggest that such benefits were taken seriously.

Finally, the decision raises major doubts about the UK government’s commitment to sustainable development.  The Welsh Government is duty bound to take sustainability seriously because it is a requirement of the Well-being of Future Generations Act, the most innovative piece of legislation ever passed by the National Assembly for Wales. The Future Generations Commissioner, Sophie Howe, has said that the SBTL pathfinder was a perfect example of the kind of project that should be supported on sustainability grounds because of its multiple dividends in terms of environmental, social and economic benefits. What does it say about the UK’s commitment to sustainability if it is unable or unwilling to harness the power of the second biggest tidal range in the world, a power that is as predictable as it is sustainable?

The rejection of the SBTL pathfinder is also a challenge to devolved government. The Welsh Government offered to part-fund the pathfinder project to the tune of £200m to demonstrate its political commitment to the project. That commitment will now be tested like never before because it will need to ask itself how, if at all, is it possible to proceed without the support of central government.

As things stand, the rejection of the SBTL project will further embitter inter-governmental relations at a time when the level of trust between London and the devolved administrations in Scotland and Wales is already at an all-time low.      

The authors are Professors at Cardiff University.

 
 
 
 

What's actually in the UK government’s bailout package for Transport for London?

Wood Green Underground station, north London. Image: Getty.

On 14 May, hours before London’s transport authority ran out of money, the British government agreed to a financial rescue package. Many details of that bailout – its size, the fact it was roughly two-thirds cash and one-third loan, many conditions attached – have been known about for weeks. 

But the information was filtered through spokespeople, because the exact terms of the deal had not been published. This was clearly a source of frustration for London’s mayor Sadiq Khan, who stood to take the political heat for some of the ensuing cuts (to free travel for the old or young, say), but had no way of backing up his contention that the British government made him do it.

That changed Tuesday when Transport for London published this month's board papers, which include a copy of the letter in which transport secretary Grant Shapps sets out the exact terms of the bailout deal. You can read the whole thing here, if you’re so minded, but here are the three big things revealed in the new disclosure.

Firstly, there’s some flexibility in the size of the deal. The bailout was reported to be worth £1.6 billion, significantly less than the £1.9 billion that TfL wanted. In his letter, Shapps spells it out: “To the extent that the actual funding shortfall is greater or lesser than £1.6bn then the amount of Extraordinary Grant and TfL borrowing will increase pro rata, up to a maximum of £1.9bn in aggregate or reduce pro rata accordingly”. 

To put that in English, London’s transport network will not be grinding to a halt because the government didn’t believe TfL about how much money it would need. Up to a point, the money will be available without further negotiations.

The second big takeaway from these board papers is that negotiations will be going on anyway. This bail out is meant to keep TfL rolling until 17 October; but because the agency gets around three-quarters of its revenues from fares, and because the pandemic means fares are likely to be depressed for the foreseeable future, it’s not clear what is meant to happen after that. Social distancing, the board papers note, means that the network will only be able to handle 13 to 20% of normal passenger numbers, even when every service is running.


Shapps’ letter doesn’t answer this question, but it does at least give a sense of when an answer may be forthcoming. It promises “an immediate and broad ranging government-led review of TfL’s future financial position and future financial structure”, which will publish detailed recommendations by the end of August. That will take in fares, operating efficiencies, capital expenditure, “the current fiscal devolution arrangements” – basically, everything. 

The third thing we leaned from that letter is that, to the first approximation, every change to London’s transport policy that is now being rushed through was an explicit condition of this deal. Segregated cycle lanes, pavement extensions and road closures? All in there. So are the suspension of free travel for people under 18, or free peak-hours travel for those over 60. So are increases in the level of the congestion charge.

Many of these changes may be unpopular, but we now know they are not being embraced by London’s mayor entirely on their own merit: They’re being pushed by the Department of Transport as a condition of receiving the bailout. No wonder Khan was miffed that the latter hadn’t been published.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.