Why did the Chancellor go all the way to China hoping to secure funding for Hinkley C?

Did the Chancellor have to go all the way to China hoping to secure funding for Hinkley C?

There are plenty of insurance companies in the City of London with billions of pounds to invest. You may be asking why they aren't queuing up to help finance Britain's next generation of nuclear power stations.

On the face of it the risk is small and the rewards enormous.

Sure, the upfront costs are breathtaking. Yes, there's a 10-year wait for payback (the time it takes to build) but the level of taxpayer support is remarkable.

Not only is the Government proposing to underwrite loans to the tune of £2 billion, with the hint of more to come, it's also guaranteeing EDF and its Chinese partners a "strike price of £92.50" for every unit of electricity Hinkley goes on to generate for 35 years - that's more than double the current wholesale price of £44.

And that's the problem. As the chief executive of one big insurer put it to me earlier, Hinkley C is "ridiculously expensive". It's clear that the current government wants this deal, the concern for any investor is that a future government may want out.

It's the strong view of some in the City, among them HSBC, that the economics of this project no longer stack up and yet today, politically, we probably passed the point of no return. Hinkley C will surely happen now.

But EDF has yet to formally commit to this project. A final investment decision is expected early next month. It's then we'll learn just what promises the government has had to make tying it in for the very long term.

If a future government does decide that £92.50 is an insane price to pay for electricity, the cost of reneging on the contract is likely to be prohibitively expensive.