O’Neill eyes exit over May’s China stance

Jim O’Neill, the Treasury minister and former Goldman Sachs chief economist, could quit the government over Theresa May’s new approach to China exposed by her handling of plans for a new Hinkley Point nuclear plant.

Lord O’Neill was a star signing brought into the Treasury by George Osborne to build relations with China and oversee new infrastructure. He coined the phrase “Brics” in 2001 to describe the world’s leading emerging economies, Brazil, Russia, India and China.

In a sign of the remaining tensions in Mrs May’s new ministerial team and concerns in Beijing that it may no longer be welcome to invest in British nuclear power plants, Lord O’Neill has told friends he will leave the government in September unless Mrs May can explain why she wants him to stay on.

“He’s considering why he has been asked to stay,” said one friend, who said the minister was baffled about the government’s change of tack on China.

Mrs May did not forewarn Lord O’Neill that she intended to put the £18bn project on hold; Beijing plans to invest £6bn in the scheme and sees it as a bridgehead to building its own nuclear power station in Britain.

Lord O’Neill considered quitting last week, but did not want to undermine another of his projects: persuading world leaders at a G20 summit early next month to act on his report on tackling drug resistant “superbugs”.

The minister was given free rein by Mr Osborne to court Chinese investment and told the Financial Times in Beijing last year that Britain had to “get over one of its perpetual problems of being a fair weather friend”.

The son of a Manchester postman, he also led the development of Mr Osborne’s “Northern Powerhouse” project, including selling schemes in the north to Chinese investors.

But Mrs May has criticised the Northern Powerhouse scheme for focusing regional policy too heavily on one region; Lord O’Neill believes that Chinese investors are now confused about government policy.

The new prime minister announced last week that she wanted more time to assess the Hinkley Point project, catching by surprise Beijing and the French power utility EDF, which wants to build the new power station.

Two Chinese companies, CGN and CNNC, have agreed jointly to finance just over a third of the project.

This is all about Bradwell. I’m sure Theresa would be happy to take £6bn off the Chinese for Hinkley but it’s not clear whether she is happy about the next stage.

The real goal for Beijing in Britain is not so much Hinkley but the opportunity to build and finance another nuclear power station of its own design at another of EDF’s sites in Bradwell, Essex.

“This is all about Bradwell,” said one minister. “I’m sure Theresa would be happy to take £6bn off the Chinese for Hinkley but it’s not clear whether she is happy about the next stage.”

Mrs May’s aides insist the delay in approving Hinkley Point was “simply about this deal” and that if there were to be any different approach to China that would be a matter for the future.

But the statement issued by the government explaining the delay said that ministers wanted to examine “the component parts” of the deal — a form of words understood in Whitehall to refer to Chinese involvement.

Mr Osborne promised Beijing “progressive entry” into the British nuclear market, but Mrs May’s joint chief of staff Nick Timothy wrote last year that this could put China in a position to turn off the UK’s power at will.

* Additional reporting by Kiran Stacey

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O’Neill eyes exit over May’s China stance
BDC July 2022 issue - 294

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