Category Archives: Society

Britain, Economic, Energy, Government, Politics, Society

The folly of Labour’s energy policy and what needs to be done…

ENERGY MARKET

Ed Miliband’s headline-grabbing pledge to freeze energy prices until 2017 if Labour is elected at the next General Election has already seen one of the ‘Big Six’ suppliers, SSE, raise its prices by an average of 8.2 per cent. Dire warnings have followed that if other utility companies follow suite, as they are expected to, the poor will have to choose between heating and eating as the winter bites. Mr Miliband could not have planned it better – first, we witnessed billions being wiped off the stock market following his announcement on an energy-price freeze at the Labour Party conference. And now, two weeks on, we are braced for yet another round of what could amount to double-digit increases to the basic price of energy for consumers.

Despite SSE’s decision, we must examine more closely why the facts of the energy market fail to conform to Mr Miliband’s egalitarian rhetoric. To start with, while British consumers may well be aggrieved with rising energy bills, they are hardly in isolation. Last year, our electricity prices were ranked 12th highest in the European Union, below all of our major rivals (except France). Britain’s gas prices were the lowest in Western Europe.

Next, it should be pointed out that many of the factors behind rising prices are beyond the control of any energy company or politician. As North Sea supplies dwindle, the UK is increasingly reliant on imported gas from countries such a Qatar. Others are in the same fix, too, with prices being driven in accordance with the laws of economics and the market.

What comes next is even more important to understand. While Mr Miliband has sought to frame the energy debate as a ‘cost of living’ issue, this is cunning and shrewd brinkmanship. The fact that energy bills have risen by a quarter over the past five years, at a time of huge pressure on incomes, has infuriated many. Nowadays, though, energy prices are being more robustly used as a policy tool. They are being used to subsidise the next generation of power stations – where the cost of building and construction has risen sharply due to Labour’s failure to replace those it mothballed. This raises the extraordinary prospect of widespread blackouts as the conceivable position arises of demand outstripping supply. Surging energy bills are also being used to fund a decarbonisation agenda that has seen non-competitive renewables receive bountiful sums in subsidies.

Yet, all the more surprising that the Labour leader does not recognise this, despite the fact it was Mr Miliband who had set-up the regime in the first place, when he was energy and climate change secretary in the last Labour government. At first, and to be fair, the Conservatives were happy to go along with it, although they have increasingly had second thoughts. Unfortunately, when the coalition came into being the control of energy was handed to the Liberal Democrats – who remain as fixated to the green and environmental agenda as Labour. The LibDem part of the coalition has made clear – through Vince Cable, the Business Secretary – that the renewables levy is non-negotiable.

So, what could the Conservatives do to bring down prices – and persuade voters that Labour’s offer is pie in the sky politics, if not complete nonsense?  A blueprint on Tory energy policy could be set out, countering the need to argue on a point-by-point basis with Labour on its policy, and one which should be designed to provide immediate relief. This is an opportunity for the Tory party to show how a majority Conservative government would help consumers.

A plan to create a proper market in energy, with smaller providers able to compete, would provide the market with competition that is much needed, particularly if new entrants to the market were made exempt from eco-levies. The current oligopoly serves no one’s interests other than the shareholders of the Big Six and the huge profits retained by them.

A new vision should accept that more money will be needed for energy infrastructure, but one where the new generating capacity is as cost-effective as possible, and delivers electricity at the lowest possible price. Embracing the shale gas revolution, for instance, would be a good start in that direction. Others might suggest decarbonising by building other types of energy driven plants but with a more rigorous subsidy regime in place. The sums wasted on renewable energy supplies have been astronomical. The status quo is to continue lumbering businesses and firms with unaffordable and uncompetitive energy costs.

Those subsidies that survive under such a plan should be stripped out of energy bills and instead become part of general taxation. Disguising such costs by loading them onto consumers discriminates against the poorest, an unfair and dishonest approach when many are struggling to pay for their gas and electricity anyway.

Keeping energy costs down can only be achieved if the market is made to work properly, not through a price-fixing cartel where the market is effectively rigged.

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Arts, Culture, History, Society

Nobel Peace, at what price?

PERPLEXED

Despite being shortlisted five times, Dame Beryl Bainbridge never won the Booker Prize, a literary prize awarded each year for the best original full-length novel, written in the English language, by a citizen of the Commonwealth of Nations, the Republic of Ireland, or Zimbabwe. Mahatma Gandhi, neither, despite his pre-eminence, won the Nobel Peace Prize, though he had been nominated on five separate occasions between 1937 and 1948. In 1948 Gandhi was assassinated and no prize was awarded, a decree given that there was ‘no suitable living candidate’. It is, of course, up to the Norwegian Nobel Committee to ultimately choose whoever it sees fit to hold the prestigious award. The Norwegian parliament appoints the committee because, when Alfred Nobel died, Norway had been ruled by the same king as its Scandinavian neighbour, Sweden, since the war between the two nations in 1814. It is becoming increasingly difficult, though, to ignore the committee’s aberrant selections.

Two weeks into his first term as President, Barack Obama was nominated for the prize, simply on the basis that the committee had heard his speech in Cairo in which he delivered, at times, perplexing and enigmatic statements. Conjecture such as… ‘Islam has a proud tradition of tolerance’ [as seen] in ‘Andalusia and Cordoba during the Inquisition’ was a presumptuous viewpoint based on little evidence.

The first U.S. presidential laureate had been Theodore Roosevelt, an award that surprised many because Roosevelt had led his own irregular cavalry in an invasion of Cuba. Other implausible laureates followed: Henry Kissinger, Yasser Arafat, and Al Gore among them.

And what of this year’s award? Those in favour of chemical weapons are likely to be displeased with the choice of the Organisation for the Prohibition of Chemical Weapons. Yet, of more concern, is the smoke-screen that has thickened in search of those chemical weapons that has created unabated slaughter in Syria’s ruthless and bloody civil war.

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Britain, Economic, Government, Politics, Society

How is it ‘socialism’ to say that market failure beckons on a grand scale?

CONSERVATIVE PARTY ETHOS?

Thatcher’s revolution of the 1980s led to politicians of all persuasions putting their faith in a new economic paradigm – a guarantee of prosperity for the majority, which has lasted decades. Today, however, following the ‘Great Contraction’ of 2008-2009, political parties can no longer offer that guarantee with the same level of confidence. Whilst economic growth in Britain has returned following three years of stagnation it is forecast that real wages will not increase until 2015 and will not return to their pre-crash levels until 2023. A fractious and defective energy market, in which just six companies control 98 per cent of supply, has left more than 4.5 million in ‘fuel poverty’. Extortionate rents within the inner cities have forced millions to rely on housing benefit. By any measure, this must amount to market failure on a grand scale.

The crisis in living standards is a challenge for all political parties but no more so than for the Conservatives, the natural defenders of capitalism. After Ed Miliband, the Labour leader, pledged to freeze energy prices until 2017 – and to build 200,000 homes a year by 2020 – the Conservative Party had a chance to offer its own solutions. Alas, as we witnessed from the conference in Manchester, it retreated to its comfort zone. Aided by an ever more right-wing press, speaker after speaker derided Mr Miliband as a ‘socialist’ and ‘Marxist’, as if concern at deteriorating wages were comparable to a belief in world revolution.

The Conservative Party conference failed to recognise that when Margaret Thatcher assailed her left-wing opponents in the 1980s, she did so in the confidence that her free-market policies retained popular support. David Cameron does not enjoy that luxury: polls show that some two-thirds of voters support a 50p top rate of income tax, a mansion tax, stronger workers’ rights, a living wage that is more consummate with actual day living, and the renationalisation of the railways and the privatised utilities. If Mr Miliband is a socialist, so must the public be if these polls are anything to go by.

George Osborne rebuked the Labour leader for suggesting that ‘the cost of living was somehow detached from the performance of the economy’. But this was a remark that betrayed Mr Osborne’s failure to appreciate that the crisis is not merely cyclical (a problem most certainly exasperated through his austerity programme), but structural. It was in 2003, way before the crash, that wages for 11 million earners started to stagnate.

Other than a pledge to freeze fuel duty until 2015, what else did the Tories have to say on the question of living standards? The most important announcements were the earlier than intended introduction of the Help to Buy scheme and Mr Osborne’s commitment to achieve a Budget Surplus by the end of the next parliament, both of which risk further depressing incomes. By inflating demand without addressing the fundamental problem of supply, Help to Buy will make housing less affordable, while the Chancellor’s promise of a balanced Budget is likely to be met by imposing even greater cuts to benefits and services for the poorest in our society. Osborne’s ideological fixation with the public finances, particularly in relation to interest payments on the government’s debt, ignores the greater crisis in people’s finances.

On the fringes of the party, though, there was some positive thinking. The Conservative campaign group Renewal, which aims to broaden the party’s appeal among northern, working-class and ethnic minority voters, published a strategy for the building of a million new homes over the course of the next parliament, a significant increase in the minimum wage, a ‘cost of living test’ for all Acts of Parliament, and for action to be taken against ‘rip-off companies’. Yet, there is little sign that the Conservative leadership is prepared to embrace the kind of reformist, centrist agenda that secured the re-election of Angela Merkel in Germany.

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