by James Meek
Privatisation, he told me, had been a matter of achieving clarity. ‘In the nationalised industries … nobody had a clue what anything cost. The government just gave them money, and sometimes didn’t … What has happened is that a price has been put on everything.’
He blamed two groups for the problems that followed electricity privatisation. One was the City analysts who mistakenly characterised investment in long-established public electricity enterprises as ‘risky’, thus underestimating how cheaply new owners would be able to borrow money. The other was the politicians, who never gave him the powers he wanted to obstruct the anti-competitive mergers of electricity makers and electricity sellers.
In 1995, Scottish Power, which was integrated from the moment of privatisation – it both sold and generated electricity from the big coal stations at Longannet and Cockenzie – became the first privatised producer to take over a privatised seller when it bid for the former Merseyside and North Wales Electricity Board, renamed Manweb. Littlechild said he had tried to persuade Tim Eggar, energy minister at the time, to intervene. Instead of worrying about the power over customers the takeover would give the Scottish firm, Eggar said he wanted to give Manweb ‘a kick in the pants’. Both companies now belong to Iberdrola of Spain.
It seemed odd that Littlechild, the great free marketeer, should be upset about a private Scottish firm taking over a privatised electricity board, yet quite relaxed about a state-owned French company taking over the private London Electricity in November 1998. That first foray by EDF was followed in 2000 by its purchase of Cottam; in 2002 EDF added the old electricity boards in south-east and south-west England to its portfolio, and in 2008, with the purchase of British Energy, it bought most of Britain’s working nuclear power stations. As age shuts them down the plan is to replace them, starting in 2023, with a French-designed reactor known as the European Pressurised Reactor (EPR). With the abolition of the CEGB, Britain no longer has the skills to design and build nuclear power stations.
‘People naturally feel some pang of regret that something made in Britain is no longer made in Britain,’ Littlechild said. ‘But the reason it happens is that a better service has been provided elsewhere.’
Didn’t it invalidate the privatisation of the CEGB and the old electricity boards if they could just be renationalised by the French, without British firms being able to do anything similar in France?
‘People are better off,’ he replied, ‘even if it means some jobs move overseas, because we specialise in other industries and other sectors where we have an advantage, like financial services. The argument that Adam Smith and others made for free trade did not depend on other countries accepting it as well. You appear to think that you should not let foreigners compete in this country unless our companies are able to compete in their country. I’m saying we stand to gain by letting anyone who wants to compete in this country – at least customers stand to gain.’
Littlechild seemed reluctant to accept that EDF’s move into Britain undermined the rationale for electricity privatisation and I was surprised, just before I left, when he looked at me sadly and said that, yes, he did regret what had happened, only a month before his term as regulator came to an end. ‘I think it was not possible for the regulator to stop it … I didn’t want an important reform being compromised by a company from overseas that was still state-owned, very large, not subject to competition, its actions not determined by meeting the needs of customers but by, well, its plans.’
It wasn’t that nobody tried to stop EDF’s move into Britain. But in 1998, Labour was working with the set-up it had inherited from the Tories. In her notorious Bruges speech ten years earlier, Thatcher had warned overweening Eurocrats: ‘We have not successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level.’ The same year, in another, forgotten speech, she boasted to an audience of businessmen that her government had forced Europe to break down the barriers to cross-border business. By supporting a single European market in goods and services, she said, the Conservatives were taking action ‘to secure free movement of capital throughout the Community’. She saw no contradiction: those who claim to be her heirs still don’t. But implicit in Thatcher’s support for the single market was acceptance of a single Brussels-based regulator as the ultimate arbiter of fair competition in Europe. Since then the EU Competition Directorate has had more impact on Britain than any other EU body. And France has proved an adept lobbyist. Brussels lets the French protect EDF from competition at home, allows EDF to borrow money at low government rates, and lets it expand into the open arena of Britain.
A strong, cunning negotiator capable of schmoozing the Eurocrats was required if the Department of Trade and Industry was ever to make the case in Brussels against the EDF takeover of London Electricity. On 30 November 1998, when news of the deal broke, exactly such a man was in charge at the DTI: Peter Mandelson. New in the job and eager to prove he was more than just a master of the political dark arts, he claimed he modelled himself on a Tory predecessor, Michael Heseltine, who had pledged to ‘intervene before breakfast, lunch and dinner’ on the side of British industry. But Mandelson never had a chance to put the case. A few weeks after EDF made its move, he was on the brink of tears, listening to Tony Blair telling him over the phone that he must resign. Details had emerged of an undeclared £373,000 loan Mandelson had taken from the Treasury minister Geoffrey Robinson to buy a house in Notting Hill, an untenable conflict of interest. Mandelson quit, and after a sojourn on Corfu with his ‘old and good friends’ from the Rothschild banking family, passed into his personal Golgotha: a small flat, a Fiat Punto instead of a ministerial car and Friday nights shopping in Hartlepool Tesco’s.
Had his desire for a nice house not forced him out of office, would Mandelson have made the effort to lead a concerted lobbying effort in Brussels against the EDF takeover? We’ll never know. He was, proudly, the grandson of a patriarch of nationalisation, Herbert Morrison, and as such a kind of familial opponent to George Osborne, son-in-law of David Howell, patriarch of privatisation. Mandelson claims in his memoirs that his house purchase was ‘nesting, rather than socialising’. But by moving to Notting Hill and hanging out with the Rothschilds he passed into Osborne’s territory.
Tucked away in Mandelson’s account of his 1998 downfall is a tortured paragraph, part confession, part self-justification, which could stand as the heart’s cry of New Labour – the agony that wells up in the soul of an ambitious, sensitive socialist who suffers because he can’t live like the hedge fund people, those people who are so much more charming than one has been led to expect, who are so groomed and well dressed and go skiing every winter. ‘A bit of high living had definitely crept into my soul,’ Mandelson wrote.
I saw what others enjoyed and I wanted to share it. Not glamour, or luxury, or swank. Just comfort and smartness. I had absolutely no desire to show off. Social life was always secondary. Work always came first. But I cared about money because I didn’t have it. I wanted my own savings, my own ability to spend on myself and others. I have never been greedy for riches. And yet it was my eyes getting too big for my stomach that brought me down.
With Mandelson gone and his replacement, Stephen Byers, coming to terms with the job, the baton passed to civil servants and to a junior minister responsible for energy, John Battle. Battle was from Leeds, a Catholic and an activist for social justice whose life until that point – studying the poetry of William Empson, training for the priesthood, setting up Church Action on Poverty to campaign for a minimum wage and mastering Labour’s housing brief in opposition – hadn’t obviously pointed him towards the energy portfolio in government. Today he is no longer an MP, and has returned north to a life of good works. I met him in the Tiled Hall Café in Leeds. He recalled the day in 1997 when he first walked into the DTI building as minister. He was greeted by a reception committee of civil servants.
‘I was asked which room I wanted, and whether I needed anything.
I remember asking for a whiteboard, and being told I wouldn’t need one. I asked for a bookcase and they said: “Minister, if there are any books you want to read, you’ve got civil servants now, just get one of them to read the book and they’ll give you a précis.” I didn’t understand that “Is there anything you need?” was code for “What do you want in your drinks cabinet?” ’ He asked the civil servants if they would draw up a report on the new energy markets and fuel poverty. ‘I was told fuel poverty was not a concept recognised in the department; it was the concern of the Department of Social Security.’
Battle was well aware of the unfairness of the French takeover, but was under the impression that Littlechild was happy to see it go ahead. The civil servants who might have told him otherwise don’t seem to have made a fuss about it; the DTI’s permanent secretary at the time, Michael Scholar, told me in an email that the EDF takeover ‘was not in the department a cause célèbre’.
Battle now regrets not challenging Littlechild and the other regulators. ‘The regulator was completely fixed on price mechanism as the be all and end all, and opening up to new entrants. On paper it sounded fine. But in the real global economy, we couldn’t buy a French power station, and they could buy ours. We didn’t get a grip on the regulators. We left the framework to them. We should have changed the remit. We were too cautious and nervous about questioning the market. Why was it that we had to lose our nationalised industries in order to hand them over to nationalised industries from other countries? They could buy into us, but we couldn’t buy into them. The French said they wanted to open up their markets but they never did.’
The DTI asked Brussels to let Britain’s own competition authorities decide on the EDF bid. The European competition commissioner, the late Karel van Miert, refused, and soon afterwards issued an eight-page judgment clearing the EDF takeover. Ignoring EDF’s monopoly in France, he focused instead on the cross-Channel cable through which EDF already sold Britain a relatively small amount of power. Such a piddling market share, he concluded, hardly threatened dominance. It was as if UEFA had been asked to consider the fairness of a French football team becoming the twenty-first member of the Premier League and, after scrupulous examination of the relative strengths of the existing twenty English teams, announced that the French would have no special advantage playing in England, ignoring the detail that when the English teams visited the French side at home, the French goal was boarded up with plywood. ‘The DTI,’ Helm writes,
simply assumed that the British model was the one Europe should follow, and that its superiority would be evident from the results … The failure to prevent EDF’s acquisition of London Electricity or its subsequent incremental acquisitions reflected not just an ignorance of how to work the Commission, but also of how to play the system. Whilst RWE, Ruhrgas* and EDF invested in the politics and processes of Brussels, the DTI relied on general principles. Its team was systematically outclassed.
I arranged to meet some of the agents of the Robin Hood group, L’Association des Robins de Bois – a clandestine network of French subversives working within EDF on the company’s home territory – in Montbéliard, in Franche-Comté, where the Peugeot family began making things for sale, starting with coffee mills and bicycles in the nineteenth century. While I waited for my contact outside the railway station, a freight train clanked past bearing a seemingly infinite number of new Peugeots. Here was France’s well-lubricated machine a-running, its state-planned network of nuclear reactors pouring out cheap, low-carbon electricity to power world-renowned Franche-Comté companies like Peugeot and Alstom, and to power the network of state-planned trains à grande vitesse that connects the country. ‘Bienvenue à Belfort Montbéliard – Territoire d’énergies’ reads a poster at the TGV station.
But Peugeot is struggling to compete at home and abroad; France’s fifty-eight nuclear reactors, all built between 1971 and 1991, are coming to the end of their working lives, with no certainty as to how they will be replaced; and the new Belfort-Montbéliard TGV station, which opened last year, deposits arriving passengers in the middle of the countryside, several miles away from both Belfort and Montbéliard. As for cheap electricity, it is no use, if you are French, knowing that EDF electricity is cheaper in France than EDF electricity in Britain (which it is) if you can’t afford it.
My Robin Hood contact, P, had worked directly for EDF for fifteen years, then spent another fifteen in the CGT union, still, under the French system, on the EDF payroll. Over lunch, he explained the Robin Hood group: a loose association of electrical engineers and co-ordinators who step in when EDF managers order a customer to be cut off for non-payment. In certain cases, if they can’t help the customer any other way, a Robin Hood EDF engineer will return to the property and clandestinely, illegally reconnect the supply. Five years ago EDF electricians discovered that some government officials whose work was tied to the company were getting electricity for nothing. They promptly disconnected them. ‘That was the birth of Robin Hood,’ said P.
The group does what it can to protect its members and impoverished EDF customers from prosecution – making sure the reconnecting engineer is not the same as the disconnecting engineer, and that the meter never stops running, so that the bill continues to rise, at least nominally. Where possible they call in social services to help the customer rather than cut them off, or invent a reason not to do the job.
‘We want an engineer to have the right to refuse to cut somebody off,’ P said. ‘It used to be easier to come up with excuses not to do it, because there weren’t so many jobs. Now one engineer’s doing ten disconnections a day, you can’t refuse them all.’ It was dangerous work, he explained. ‘You need to know how to do it. If you make a mistake when you try to restore electricity, you’re dead. If you create a short circuit you can blow your head off. You need special gloves, a special mask, a visor.’
Rather than use the tactic EDF and other electricity firms have adopted in Britain – replacing non-payers’ meters with a meter requiring power to be paid for in advance – the homeland EDF will sometimes install a ‘trickle meter’, rationing poor customers to a thousand watts at a time. ‘A thousand watts. It’s too little,’ P said. ‘You can’t live with that. If you have the light on in the evening, the TV and the washing machine, that’s it.’
P described the Robin Hood group’s activities as ‘a legitimate act of resistance’, echoing the origins of EDF in the undercover planning for postwar France carried out by the National Council of the Resistance during the Occupation. At the CGT’s headquarters in Paris, in a modern brick building hollowed out by a vast atrium, I found the same description of France’s electricity supply as a part of la patrie that had somehow been taken over by outside forces. ‘For us,’ Denis Cohen, the communist head of the CGT until 2003, told me, ‘energy is like culture; it’s not a private good.’
It was puzzling. From this side of the English Channel, it had seemed clear enough: although some shares in EDF have been sold, and the management has been given a measure of commercial freedom, EDF looked like a state company, owned, controlled and supported by the French state, subject to French political control, and thus to the French electorate. It has taken over a large chunk of the British electrical system, though EDF doesn’t answer to me and my fellow voters. Yet ordinary French people don’t seem to feel it is under their control, either. My efforts to arrange an interview with the company’s supposed owners, the French state, in the form of the Agence des participations de l’État, were rebuffed. As a last resort I turned up unannounced at the APE’s headquarters in the government offices in Bercy, a forbidding building resembling a cliff face of beige stone and tinted glass. I was shown the door.
‘It’s a funny company,’ Thibaut Madelin, energy correspondent of Les Echos, told me of EDF. ‘Obviously it’s a state-owned company, and you can argue it’s controlled by the government, and the union plays a big role, but I think the real power is within EDF. I’ve covered energy for four years and I’ve
found no one can actually challenge it. The civil service and the regulator try somehow to control EDF but they can’t. It’s very hard to define where the power comes from.’
One spring morning I took the train from London, north through Cambridgeshire and Lincolnshire, to Nottinghamshire. The trackside was sprinkled with blackthorn blossom and when the sun flashed between the rainclouds the fields of rape flowers shone a dizzy yellow. Just before Newark-on-Trent the track began to cross lines of six-armed National Grid pylons, heaving their cables over the sheep and hedgerows like devas converging on a sacred site. We passed between Sherwood Forest and the River Trent and clusters of steam-headed cooling towers rose on the horizon, signalling the approach to England’s great electric estate.
The five coal-fired power stations that spread out in an arc along the Aire and Trent valleys have been there since I was a boy: the squat towers, seen from the window of express trains hurrying between London and Scotland, seem as natural in the landscape as flat green fields and comfortable houses of dark red brick. Most of them were built by the CEGB in the 1960s, in the heyday of state planning, to use local coal. The quintet of West Burton, Cottam, Drax, Eggborough and Ferrybridge still run. With their turbines spinning at full tilt, they can make a fifth of the electricity Britain needs on a cold winter’s day.
Inside the noisy room at Cottam that houses four 164-foot high boilers, Stephen Rawlinson, the plant’s mechanical maintenance manager, beckoned me up a set of metal steps and opened a tiny hatch. We were like insects under the grate of a coal fire, sparks and orange-hot cinders the size of my head shooting into heaps of ash. Looking up, I saw the inferno itself, a vast fireball coiling and erupting, fed by jets of pulverised coal, ground finer than talcum powder in enormous rotating drums filled with steel balls. Here was the elemental fury behind the green charging light and the whine of the washing machine.
