Margareta Pagano: Is the nuclear industry dead and buried?

Japan's crisis changes the sector for ever

It's taken the nuclear industry more than three decades to shed its toxic image. If you look back to the accidents at Three Mile Island and Chernobyl, it's quite extraordinary how nuclear power has gone from being seen as dirty and dangerous to being low-carbon and safe. In no time at all, the nuclear lobby has become one of the most powerful industrial complexes on Earth. What has made this conversion so interesting is the way policy-makers, politicians and even green campaigners bought into the re-branding because of our dependency on expensive and limited fossil fuels but also because nuclear power has been seen as the cleanest and quickest way to cut carbon emissions.

And it worked because, until the terrible events still unfolding atFukushima, 442 reactors had been built around the world and there were plans for 65 new ones – nearly half of them in China. Ironically, nuclear power is one of the few booming industries, creating new jobs and putting nuclear physics back on the agenda at universities, many of which had dropped the discipline.

Yet this renaissance was always built on the shakiest of grounds; in 2003, the Government came within a whisker of cutting all nuclear ties and it was only a last-minute U-turn after intense lobbying by energy advisers that Tony Blair's Cabinet relaunched our nuclear programme. But the pact between policy-makers and the public in the UK and overseas has stayed brittle; opinion polls show that only half the population has any faith in nuclear power, and even those who do support it with great reluctance.

But one terrible tremor off the coast of Japan, tilting the world on its axis, has sent shock-waves through that fragile pact. You only have to see how hard the shares of nuclear construction firms – such as France's Areva and EDF, Westinghouse and GE in the US and Japan's Hitachi – have been hit to smell the fear. Now uranium miners are suffering, as a couple of buyers in the middle of takeovers for uranium-rich firms, including Mantra in Australia, have asked to renegotiate terms. But the most volatile market of all was uranium itself, where hedge-funds were short-selling, and trading in the commodity was five times the usual as the price collapsed from $73/lb to $49.25.

Politicians have moved swiftly to allay fears; this may be posturing but they can read the public mood. Germany pulled seven stations out of operation for three months for safety reviews and will start using more coal, Switzerland has stopped the building of three plants, and both Russia and China have said they are reviewing old and new plants. President Barack Obama has called for a review of the 104 reactors in the US. Here in Britain, Chris Huhne, the Energy Secretary, who is evangelical about nuclear power, has been more ambiguous but said the ratification of Britain's eight new nuclear power stations will be put on hold until the final outcome of events in Japan, and the results in September of an inquiry by the UK's chief nuclear adviser. But sources suggest that Huhne and his ministers are unlikely to be put off course by Japan – unless of course there is total meltdown – and new-builds like that at Hinkley Point will merely be delayed until the autumn.

Whatever your view on the science of nuclear power, the industry will be changed for ever by this crisis, and will certainly be made more expensive. The new EPR plants cost at least £5bn to build and some estimates suggest extra safety will add at least another 10 per cent to that, which in turn will feed through into higher electricity prices. Are these costs which the private sector – which will have to pay for the nuclear programme – can stand or will tolerate in the light of Fukushima? Or will governments have to subsidise construction? Will the public, already nervous in an increasingly nervous world, stand for eight new power stations? It's not hard to imagine students – facing £80,000 of debt for a degree – starting up their own Greenham Common-style protests.

Jeremy Leggett, one of nuclear power's fiercest critics who also runs one of the fastest growing energy firms, Solar Century, thinks the nuclear sector is dead. What's more, he predicts a devastating energy crisis unless the Government moves swiftly to build up all energy sources as alternatives to sky-high and volatile Middle Eastern oil and gas supplies.

"This is a World War II scenario," he says. "We need an emergency war cabinet appointing an army to help people conserve energy, invest in solar and all other sensible alternatives. We've got to build the new Spitfire."

Maybe this crisis could be just the trigger we need to force through policies to build up a self-sufficient energy economy – necessity has always been the mother of invention.

None of us can call what will emerge from Japan's tragedy but there will be lessons for us to learn, and perhaps the first of these is to listen to sensible nuclear naysayers – like Mr Leggett.

Don't blow it, Mr Osborne. This is your chance to get Britain back on its feet

It's make or break time for George Osborne when he stands up on Wednesday to present his first proper March Budget. So it's no surprise that the Chancellor is said to be nervous about the biggest day yet of his political career.

Everything about Osborne's delivery will be crucial, and every detail will be picked over ruthlessly by the press and the Opposition. But it's the Chancellor's tone which will be most important, more vital than the calculations he delivers to back up the austerity measures. Never has confidence been so important, and Osborne should realise that helping to rebuild the public mood falls squarely on his shoulders, as he is the one who stuck his neck out telling us that restraint is the only option.

There are signs that he understands this. When announcing the OECD figures last week, he said: "Last year's emergency Budget was a rescue mission, bringing us back from the brink of fiscal disaster and we will stick to the course that we have set. The mission of this year's Budget will be to move from rescue to reform." So what can he do to cheer the army of small-businessmen and women on whom we depend to create new jobs? There won't be big give-aways but there will be cuts to red tape. Entrepreneurs' relief could be lifted to beyond its present £5m cap, and there should be signs of more help for the "patent box" and R&D to encourage innovation. On top of relaxing planning laws, there'll be some new enterprise zones offering tax benefits such as enhanced capital allowances.

But if Osborne wants to go down in history as the reforming Chancellor, he'll need to say this week that – at some stage – the top 50p tax rate will be cut, NI and income tax will be integrated, and personal tax thresholds will be frozen and eventually cut. He's the one who set up the Office of Tax Simplification and he needs to stand by his own principals, otherwise the court of public opinion will hold him to account.