Ed Miliband minds the energy gap

We are learning more every day about how Ed Miliband's Labour Party will approach the 2015 general election.

In his conference speech two days ago he set out plans for a 20-month domestic energy price freeze. What populist larks!  I too would like lower prices.  What about a petrol price freeze while we're at it?

Of course it's more complicated than that.  The time to announce a price freeze is the day you impose it. Otherwise suppliers will just put prices up beforehand.  Moreover, suppliers will try and protect their positions by buying more gas in advance.  This increased forward buying will push wholesale prices up. Miliband's announcement might actually have an effect the reverse of what's intended: we could be paying higher energy prices long before his freeze comes into force.

The Labour leader's critics suggested yesterday the policy might lead to blackouts.  If this seems fanciful, it did happen in California in 2000. There the freeze coincided with a drastic increase in wholesale prices, which energy companies couldn't pass on to consumers.  As a result the Pacific Gas and Electric company went bust and blackouts ensued.

But short-term blackouts are the least of our worries.  As Britain's ageing power stations have to be taken offline this country desperately needs new energy investment.  How can energy companies be expected to take the long-term decisions needed to secure future supply if there is a reasonable prospect of a government in 2015 which is hostile to their interests?  At a stroke Miliband's announcement will depress power companies' share prices and make it harder and more expensive for those companies to raise capital.  Guess who will end up paying for that?  

Even if there are no power cuts in 2015, Labour's announcement has made them more likely in future.  The Torygraph quotes one Peter Atherton, an energy industry analyst, as saying, "Labour would be naive in the extreme to think that industry can absorb the cost of a price freeze while at the same time making significant new investments.  Even if Labour don't win the election, it will stop anyone making any decisions.  It kills investment stone dead."

To be clear, the energy industry is a shambolic mess.  The domestic industry lacks proper mechanisms for fair competition - degree qualifications in statistics and probability are required to determine which is the cheapest tariff for your usage - and energy companies concentrate on returning maximum value for their shareholders rather than equipping the UK for the 21st century (you can't blame them for this - it's what they're supposed to do).

How has this come about?  The consequences of the Tory privatisation are becoming more and more apparent, as what requires a national strategy is left to the self-interested tactics of the market. And Labour hasn't helped.  Its energy review in 2002 (five years after returning to power!) concluded, "The immediate priorities of energy policy are likely to be most cost-effectively served by promoting energy efficiency and expanding the role of renewables. However, the options of new investment in nuclear power and in clean coal (through carbon sequestration) need to be kept open, and practical measures taken to do this."

The review went on, "Because nuclear is a mature technology within a well established global industry, there is no current case for further government support . . . the decision whether to bring forward proposals for new nuclear build is a matter for the private sector."

It's that last statement which is the most astonishing. The Government, with a duty to make sure Britain's energy needs are met, had no plans to do anything at all in respect of nuclear power. 

I vividly remember how hopping mad this review made me. Not because I am a nuclear enthusiast, but because it was evident even then we were going to have to have more of it, and, above all, because it is the Government's responsibility to plan, not just to leave it to the markets and hope something will turn up.

An energy white paper the following year concluded, "This white paper does not contain specific proposals for building new nuclear power stations . . . we do not rule out the possibility that at some point in the future new nuclear build might be necessary if we are to meet our carbon targets". 

Not ruling it out, not ruling it in. In fact, doing nothing.

Another review in 2006, making more favourable noises towards nuclear power, was challenged by Greenpeace in the High Court in 2007. The High Court ruled that the review was "unlawful". The Government tried again. In its Review that year it expressed the 'preliminary view is that it is in the public interest to give the private sector the option of investing in new nuclear power stations'. The words "luke" and "warm" spring to mind; not to mention "dither", "indecision", "lack of leadership", and "you have been in power now for ten years, you wallies."

The cherry on this cake of indecision was placed there by Gordon Brown in 2008, with the appointment to the newly created post of Secretary of State of the Department of Energy and Climate Change of one of Labour's rising stars.  Step forward Ed Miliband.  

His only contribution to Britain's energy industry was to raise the target for emissions cuts.

Successive governments have fiddled while homes burn Britain's dwindling gas supplies, and Vladimir Putin's finger twitches next to the Trans-Siberia pipeline's "off" button.  Labour hated the idea of nuclear power.  The Tories are hamstrung by the dog's-breakfast of a system they created. Meanwhile the former Energy and Climate Change Secretary (2008 to 2010) Ed Miliband comes up with populist gems such as a price freeze, counterproductive tinkering when the whole system needs reform. 

It's the kind of policy which might just get him elected though.

Labour's missing billions and the privileged few

I don't know if Ed Miliband actually used the phrase "privileged few" in his speech to the Labour Party conference yesterday, but he's come out with it several times recently, as have other members of the Party's front bench team.  Clearly Labour's spin doctors are trying to get the idea into the public consciousness.

The message is simple.  A privileged few were responsible for the financial crisis but have been largely untouched by it.  They must be made to pay more to put things right.

Some of the flaws with this analysis are blindingly obvious and have been touched on too many times here to warrant a full exposition.  The financial crisis happened because Western economies increasingly used debt to plug an income gap caused by lack of competitiveness.  The bankers got rich enabling the rest of us to borrow.  Even they hadn't been so keen to help us get in debt, a financial slow-down would have happened anyway, and probably sooner.

But that's by the by.  A close family member of mine is one of the "privileged few" and so are quite a lot of my friends.  Almost without exception they are people from very ordinary backgrounds who were bright, worked hard at school, at university and on pretty much every day since, including evenings and weekends. They are aware how lucky they are to be in their present position - essentially, having a good job - but I think that is the only privilege they would acknowledge.

Their affluence has been earned, not handed to them on a plate, as Miliband's slur calculatingly suggests. The cry often goes up for "the rich" to pay their fair share.  And yet "the rich" are paying top rate income tax at 45%, and if they buy a house for half a million they will pay Stamp Duty at 4% rather than the 0% a cheap flat attracts.  To be clear, they'll pay HMG £20,000 just for "the privilege" of buying a house.  But apparently this isn't fair.  How much tax would the "rich" have to pay, one wonders, before it would be fair?  Advocates of fairness never say.  For them fairness is on a ratchet.  Onwards, but never back.

Miliband is I think preparing the ground for significantly higher taxes for "the rich".  Leaving aside the uncomfortable fact that "the rich" are often self-employed, and higher taxes tend to make them phone for their accountants, taking money from them also reduces their spending power and thus tends to slow economic growth.  According to a report prepared for HM Revenue and Customs published in 2012, the yield from Labour's increase of the top rate of tax to 50% "is much lower than originally forecast  . . . and that it is quite possible that it could be negative".  Yes, that's HMRC, who love money more than any institution I have ever come across, suggesting that Labour's 50% tax hike may have actually cost the taxpayer money.

But the real problem with higher taxes lies elsewhere, and I was wondering whether Miliband really understands the difference between a million and a billion.  There are a relatively small number of people earning over £150,000, and, even if taxing them more brought in a few million, it takes an awful lot of millions to make a billion.  One thousand to be precise.  And our debts are measured in billions, not millions.

Last year the Government's deficit was about £120 billion.  That is a gap which is not going to be plugged by taxing "the rich" a bit more.  It is going to be plugged by keeping a lid on public spending, encouraging enterprise and getting the economy to grow.  Higher taxes makes these things less likely, not more.

I sometimes think Labour has learned absolutely nothing from the debacle of 2008 and from their years in opposition.  The people who palpably have - Alastair Darling springs to mind - have been marginalised.

None of this means Labour won't win in 2015.  In fact I think they will.  There are an awful lot of other people in Britain who think the clock can be turned back to the heady days before 2008, if only "the privileged few" shoulder their fair share of the burden.

Labour's free childcare policy

One Nation Labour's promise to give parents of three and four year olds 25 hours a week free childcare is a welcome reminder of more progressive times to come after 2015; or a gruesome reminder of past policy mistakes, according to your taste.

Let's assume that putting young children in a nursery is better for them than staying at home with a parent (it may be, but where's the evidence?), what might be the consequences for the labour market?  The obvious one is that many young mothers will be free to go back to work earlier than they otherwise would.  This all sounds OK until you consider that if young mothers are back in work more quickly they will be doing jobs that would otherwise be done by women and men without childcare commitments.  Again, this might be a good thing, but the benefit of helping one particular group back into work (young parents) at the expense of others isn't at all obvious.

Secondly, if as it appears this is to be a universal benefit, what is the point of paying the affluent for something they don't need?  We have, for heavens sake, just got rid of universal Child Benefit.  This has cost my family about £150 a month, but we didn't need the money anyway and neither did a lot of other people.  Why start up another scheme that pays money to people who don't need it?

Thirdly, why does Labour think it's a good idea to increase public spending when Britain has been living beyond its means for all but five of the last thirty years or so?  Today, Tuesday 24th September, our country will have to borrow between three and four hundred million pounds just to stay afloat.  That's a staggering figure, and we're borrowing that amount every day.  Ed Balls says his new childcare scheme will be funded by increasing the Bank levy.  Curiously though Labour said in 2012 it would use an increased tax on bankers to fund a Youth Jobs Guarantee.  Similar taxes have also been proposed to pay for a wish list of VAT cuts, Regional Growth Funding and a number of other Labour policies.  The Bankers appear to be the gift that just keeps on giving.

So Labour's childcare giveaway is a policy whose benefit is unproven, whose consequences for unemployment may be deleterious, whose focus includes people who don't need it and whose source of funding has already been claimed repeatedly elsewhere.

In about 2004 Frank Field wrote an influential article in the Guardian (well, it influenced me anyway) which ended "In the future governments are going to have to provide better public services with less money, not more".  Unfortunately Field's article doesn't seem to have influenced Ed Miliband at all.

Robert Newman and the Optimum Population Trust

Population control is in the news again, after David Attenborough described humans as "a plague".

This morning the Guardian publishes a contribution to the debate from the unlikely shape of Rob Newman, former comic partner of David Baddiel.  Newman now likes to be known as Robert - he has published novels and wants to be taken more seriously.

Newman takes an opposing position to Attenborough's.  He says population growth "has been slowing since the 1960s . . and has fallen below replacement levels half the world over".  Moreover "worldwide, fertility per woman has fallen from 4.7 babies (per woman in the 1970s) to 2.6 in 2005-10 . . . Attenborough's thesis is therefore flawed".

Well not so fast.  Is the world's population going up?  Yes.  Are population levels already too high?  Attenborough thinks so, as do a lot of other scientists.  Rob Newman is essentially saying, "it may be crowded here in the Black Hole of Calcutta, but don't worry, new people aren't being shoved in anything like as fast as they were forty years ago".  At a stroke Newman has misunderstood Attenborough's position, and misunderstood the effect of the statistics he quotes.  He has mistaken a situation in which things are getting worse a bit more slowly for one in which everything's OK.  Attenborough's thesis might be flawed, but not on the basis of this dozy attempt at ratiocination.

As so often where an apparently intelligent person adopts a position which can be made to collapse in two short paragraphs of scrutiny, there's an agenda here.  Newman goes on to say, "You can say there are too many people in a lift . . . but not on earth.  To wish to reduce the number of living breathing humans on this planet is an obscenity".

What is Newman getting at here?  We soon find out, with a couple of sentences on "mainstream intellectuals such as HG Wells, WB Yeats, Virginia Woolf and DH Lawrence proposing not just sterlisation but extermination".  Newman apparently thinks that Attenborough and his fellow travellers (you know, fascists such as Jonathan Porritt) are in favour of this sort of drastic measure.  But they aren't.

A rather snarky Guardian leader a couple of years back criticised the Optimum Population Trust for suggesting Britain's ideal population was about 17 million, on the basis that the OPT didn't say "which 17 million would be left".  I can enlighten the Guardian and Mr Newman here.  The 17 million, say, remaining would be the people who had been born after family planning, tax and benefit incentives had been brought to bear over generations. There wouldn't be any eugenics, sterilisation or firing squads, as I understand it. Thank goodness.

"To wish to reduce the number of living breathing humans on this planet is an obscenity".  Perhaps Rob Newman is a Catholic.  I can't see any other reason why anyone should feel fewer births would be obscene.

We now approach the core of Newman's argument.  Essentially it's all about politics, innit?  30% of US corn ends up as fuel ethanol, while 5% is grown as corn syrup for junk food sweeteners and fizzy pop.  Never mind the habitat destruction and climate change attendant on the consumption required by a growing population (sorry to mention that again, Rob - er, Robert), we're just using our resources unfairly.

"Food security and ecological sustainability are impossible without democratic control of land", he writes.  Never mind that in the US, for example, land use is already democratically controlled, it's evidently the wrong kind of democracy if it produces a result Rob Newman doesn't like.  "Only through land nationalisation can we introduce the connected landscapes, smart cities and wildlife corridors that will let ecosystems bend, not break".  Yes, it's not enough for Governments to make laws which tell people what they can do with their property; the Government now has to own it as well.

"As with homelessness a century ago, the problem facing a population of 7 billion is not too many people crowding too small a piece of land, but too few people owning too much world".  Because obviously replacing a small number of people with, er, an even smaller number of Governments is going to sort all the problems, right?  Because after all, Governments always make the right decisions, don't they?

I'm trying to remember back to a time when previous attempts were made to get the state to interfere with agricultural production on a grand scale.  Russia in the 1930s?  China in the late 50s?  Doesn't augur very well, does it?

Newman's argument at heart is a sort of idealist gradualism.  It says, problems of habitat destruction, resource exploitation and climate change can be overcome if we just all get together and organise ourselves in the right way.  Even if he is right about that, he must know perfectly well that the chances of such concerted action are absolutely zero.  Essentially what he wants is to be able to sit back as events unfold, rub his thumbs together and say, you see, I told you so.  He will feel smug, and no-one will ever know whether he was right or not.

But actually a lot of the problems Newman alludes to could be eased simply by there being fewer people. And fewer people will be a good deal easier to accomplish via a lower birth rate than by watching as the population rises and the earth shrugs us off in chaos and famine.  Newman poses as a humanist and humanitarian.  Actually he risks the greatest inhumanity of all.

Nick Clegg and the Boundary Commission

Paying any attention to a speech by Nick Clegg is probably the acme of futility.  But I was struck by something he said yesterday, and it may be worth two minutes of your time too.  Amidst a long list of things the Lib Dems in Coalition were pleased to have stopped the Tories doing, Clegg told the Party Conference that he had said, "No to the boundary changes if you cannot deliver your side of the bargain on House of Lords reform".

It's worth just considering what that bargain was.  Para 6 of the Coalition agreement states, "The parties will bring forward a referendum bill on electoral reform, which includes provision for the introduction of the alternative vote in the event of a positive result in the referendum, as well as for the creation of fewer and more equal sized constituencies".  This refers to boundary changes, which I'll come to in a moment.  "Both parties will whip their parliamentary parties in both houses to support a simple majority referendum on the alternative vote, without prejudice to the positions parties will take during such a referendum."

A couple of paragraphs further on there was also a commitment on House of Lords reform.  "We agree to establish a committee to bring forward proposals for a wholly or mainly elected upper chamber on the basis of proportional representation . . "

What happened to these pledges?  The Tories delivered on their promise to hold an AV referendum.  To the Lib Dems chagrin, the public overwhelmingly rejected AV.

The Tory leadership delivered on their promise to establish a committee to devise proposals for an elected House of Lords.  In fact they went further.  The Government put forward a bill which was debated in the Commons last summer.  Unfortunately for the Lib Dems, over 90 Tory backbenchers rebelled against the Government, despite a three line whip, thus denying the bill a second reading.

It's worth pointing out at this stage that if Labour had voted for the bill it would have been passed.  Someone I respect told me the other day that Ed Miliband was a man of principle.  Pshaw.

In January 2013 the Lib Dems - including Lib Dem Government ministers - voted against the Boundary Change bill, thus ensuring its defeat.

Now politics is a dirty business, and it may be that expecting the Lib Dems to honour their pledges is naive. But the Tories did exactly what they said they would do, and the Lib Dems didn't.  That the AV referendum and boundary changes were linked is made explicit by their inclusion in the same paragraph of the agreement and their inclusion in the same parliamentary bill.  But even if you don't agree with that - and reading this stuff with a lawyer's eye does make one rather despair at the amateurish drafting - what exactly was it that Clegg boasted yesterday he had blocked?

Well actually it was a proposal by the Boundary Commission to reduce the numbers of MPs by about 50.  The Boundary Commission is independent of government, and its job is to try and keep constituencies approximately the same size in population terms.  Because populations are constantly shifting, this isn't as easy as it sounds.  This is what the BBC website says about the current system - "At present, more votes tend to be needed to elect a Conservative MP than to elect a Labour MP".  If the BBC says so, it must be true.  It is reckoned to have cost the Tories about 20 seats at the last election.  Under the 2013 Boundary review proposals - which the Government does not have power to amend - this anomaly would have been rectified.  There would have been fewer constituencies in the North, for one thing, where Labour tends to do better.

Curiously, the unfairness of the present system seems to be widely acknowledged, even at the Guardian, but no-one seems to mind very much.  When the balance of support for the major parties is so finely balanced, even to the extent that it could decide the next Election, the postponement of the 2013 review to 2018 was a momentous political event that even the Tories seem to have shrugged off.

In August 2010 a Government minister put the case for change very well in Parliament.  "Up and down the country, constituencies can vary enormously in size, and that's a major cause for concern . . . For example 87,000 voters in the East Ham constituency together get one say in the government.  The 66,000 voters living 10 miles away in Islington North get one say too.  So, if you live in Islington, your voice counts for more. . . Redrawing the boundaries lets us make constituencies more equal in size and more current, and it's an opportunity to cut the number of MPs. . .  It is one of the founding principles of any democracy that votes should be valued in the same way, wherever they are cast.  Over the years, all sorts of anomalies have developed, such that different people's votes are simply not worth the same in election to this place.  That surely cannot be right".

You will be way ahead of me.  The speaker was Nick Clegg.  That's the same Nick Clegg boasting yesterday about having stopped the changes he was arguing in favour of only three years ago.

The same Nick Clegg whose Sheffield Hallam constituency would have disappeared if the Boundary Commission changes had taken place.

Scotland's Currency Options redux

I've been arguing for some time that the issue of which currency an independent Scotland would use is a serious stumbling block for the Nationalists, and today comes a report from the National Institute for Economic and Social Research which bears this out.  You can find Scotland's Currency Options on the internet, but for the time-strapped they've produced a really good cartoon which summarises the arguments here.

It's a measure of how far the arguments have come that the SNP has abandoned any thought of joining the Euro, and the NIESR doesn't even consider this.  Alex Salmond currently says Scotland will keep the pound, either in an informal or formal currency union, but as the NIESR points out, this is fraught with difficulties.  In either case, control of interest rates would be retained by the Bank of England, without regard to economic events in Scotland.  In a formal union, the BoE could only agree to act as lender of last resort if Scotland agreed to spending plans endorsed by Westminster.  What price independence then?  In an informal union there would be no lender of last resort, with damaging consequences for the rate at which Holyrood could borrow on the money markets.  The NIESR thinks the best option might be for Scotland to have its own currency, something I've argued before here.  There are difficulties with this too, but at least Scotland would be able to control its own interest rates, print money and act as lender of last resort.

The NIESR also argues that Scotland will be saddled with a formidable amount of debt post-Independence, and that selling its oil revenues to the rest of the UK would be a good way of paying it down.  Little though I like Salmond, I wish him luck selling that argument to the Scots electorate.

All of this is I think chastening for the SNP.  I don't like nationalism much - an unholy mixture of sentimentality and fascism - and this big Romantic idea, like many such, flounders in the face of brute economic reality.  That doesn't mean the Yes campaign won't win.  It just means that if it does, stupidity (and dislike of the English) will have trumped commonsense.

On the same Youtube page as the NIESR cartoon is a short video of Nigel Farage on Question Time. In it Farage makes the point that by becoming independent Scotland would merely be swapping the Westminster yoke for the Brussels yoke.  This might be true if Scotland joined the Euro, but it looks as though even if it keeps the pound the Scots would still be tied to Westminster's apron strings.

Banning the Y-word

Should use of the word - and please let's not be all Lord Voldemort about this - "yid" be banned in football grounds?  In the last 24 hours the media has been full of prominent Jews - Danny Finkelstein and David Baddiel amongst others - denouncing the word as a "racist slur", so perhaps we should start by putting that canard to rest.

I don't agree with much Richard Dawkins says, at least not on the subject of religion, but the other day he wrote, "Yes, you can convert to Judaism and no, the Jews are not a race.  You can argue about whether Judaism is a religion or a cultural tradition, but whatever else it is not a race".

Correct.  And so whatever else it might be - sectarian abuse perhaps - "yid" is not a racist slur.  If you're still not convinced, look at these two pictures here and here.  All Jewish people.  Ask yourself whether they are the same race.

"Words", Paddy McAloon wrote, "Are trains / For moving past what / Really has no name".  Words are mere signifiers.  So what does the word actually signify?  It depends who utters it of course. Amongst Tottenham Hotspur fans "yid" means "us".  Amongst Jew-haters it means "you Jewish people who we loathe and despise".  Amongst Chelsea or Arsenal fans it means "you supporters of our most bitterly hated rivals", perhaps with a bit of anti-semitism thrown in.

It won't come as any surprise to Jews to find that some people don't like them.  It is a sad fact of life.  Will the Jew-haters, if any, amongst Spurs' North London rivals, dislike Jews any less because they can be banned from football grounds for shouting "yid"?  No.  It will not stop them disliking Jews.  It will only stop them articulating their dislike in a football ground.  I hope Jewish people find that some consolation, but I rather doubt they will.

There is a small element of Arsenal and Chelsea's support that likes to make a hissing sound at Spurs games, to mimic the gas chambers of Auschwitz.  That this is in desperately bad taste I don't doubt. Actually not many of Spurs supporters are Jewish, but of the ones that are I'm absolutely sure that some will have relatives who died in Auschwitz.

What to make of such insouciant stupidity?  Do you ban it to protect the feelings of Jewish supporters? Perhaps.  I can't think of a better demonstration that words are particular arrangements of sounds that carry meaning to and fro than this evidence that a mere hiss can be ten times as offensive as the word "yid".

I am on the whole in favour of people being able to say what they like, unless it is really, really necessary to stop them. Abusing the other team's fans has always been a part of football, and it's one whose rich inventiveness would be desperately missed, even by members of the prawn sandwich brigade like me.  As an occasional attender at Old Trafford, I have sometimes found myself in the middle of thousands of others all shouting "You Scouse bastard", or singing "Could be worse / Could be a Scouse / Eating rats in a Council house".  "Scouse" here also means "you supporters of our most bitterly hated rivals".  Liverpudlians are, like Jews, another social group who might well be able to argue for an end to this pejorative slur.  Liverpudlians, like Jews, are not a race.  But if Jewish people can get away with it, why not Liverpudlians?

 Like another well-known thoroughfare, the East Lancs Road is paved with good intentions.