I intended to write a review of Truss's energy plan yesterday, but events got the better of it.
The most appropriate thing to say is “what plan?”
Truss made the biggest spending commitment she is likely ever to make, but could not tell us what it will cost and will not do so for a month.
For those already in fuel poverty, or near it, this will undoubtedly continue under this plan. Without significant changes to benefits that will be very much worse in 2023/24.
The wealthiest get an absurd and unjustified level of support under the plan, which increases inequality as a result.
Business, public services and charity are in limbo, having no clue as to what help they will get, and with it then only being available for six months at most when households will get support for two years. This seems too little to stave off recession.
Fracking is in, as is oil and gas extraction. It is as if we have no climate crisis. Energy efficiency and renewables - together the cheapest, quickest and most effective way to deliver energy efficiency - were ignored, entirely. This was gross irresponsibility.
And how any of this will be funded we do not know, except there will be no windfall taxes on profits arising from the exploitation of war, which is quite extraordinary and was well dealt with by Keir Starmer.
To describe this as a plan would be too kind. It was nothing of the sort. It was a shambles, issued after she had the whole summer to work out what she would do.
As portents for the Truss premiership go, this was bad, and it followed her first rebuke from the Speaker, who described her government as incompetent.
Truss now gets a respite. After months without government, parliament will not now sit for the ten days of official mourning for the Queen. Then there will be the party conference break. To say government has departed the UK would not be unkind. To suggest Truss did not play her first day well would be generous.
What a shambles.
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If I was to be cynical (as I generally am), I’d think that the regressive nature of the ‘plan’ was early electioneering to ensure wealthier voters are going to continue to lean Tory at the next election.
Most people will be happy not to be facing the terrifying increases in energy bills which were due so won’t think much about how ‘fair’ the distribution is. Those in the higher income brackets who will keep hold of a lot more of their money than they might have done are likely to be very aware indeed, thank you very much.
It does require intense cynicism to believe that a government would spend tens of billions of public money to prop up their vote in a national crisis, but then they’ve got form for this, haven’t they?
You may be right
The duration of two years to autumn 2024 suggests that
I pencil in an election in late September / early October 2024
Mariner, I think that you are spot on.
But we must take the opportunity to point out the truth out as much as we can when out in the public.
All that the policy is, is the stretching out of paying bills using time to hide profits and the eventual false accounting that will take place when people realise that what they have actually done is swap the NHS and other public services for their energy bills. They are not going to get both! Not from this bunch of bastards.
We have just lost The Queen and all I could think was what a wonderful opportunity it gives the Tory party – a mass distraction – albeit heartfelt – is now ready to be exploited by the Thatcherite Neo-liberal Far Right.
Sorry to sound defeatist but how come the Devil gets all the best tunes?
Evil is having the time of his life on this septic island.
I think the election may well be next year, May or June.
Reasons as follows.
1) There will be a budget fairly soon, probably with tax cuts. 2-5p off income tax? 5% off VAT? Truss will want to fight the election on whether Labour will honour these tax cuts if elected. She will want to fight the election on the Tories being tax cutters while Labour are tax raisers – the usual old Tory stomping ground.
2) 2024 will be the end of the second year of her energy plan. Things may be worse by then. I doubt she will want to fight an election on another big spend commitment to extend the energy bill freeze.
3) She will want her own mandate as far away from Johnson as possible.
4) Tory Government’s have a habit of going for an early election, because they fear the potential for brown stuff hitting the fan if they delay. That’s why they wanted the end of fixed term Parliaments. It puts power back into the hands of the Tory elected dictatorship to pick the best moment for them.
A lot could go wrong between now and 2024, I think she would prefer another five years (or four) from 2023. That way she will have another big giveaway budget in 2027. The usual Tory blueprint.
Let’s see…
For many people having energy bills go up to £2500 will be terrifying enough.
As with Sunak and COVID, I expect Truss will have to come back with more because this plainly will not be enough. After Johnson’s rudderless zombie government over the summer, it seems we will have another month without proper politics. But grief at the loss of the Queen is not going to put food on tables or fuel in boilers.
Truss identified three immediate priorities: growth, energy and the NHS. We will see, but I expect things are going to get very difficult for many people, and then for Truss and the King, very soon.
Things are going to get difficult for both the King and Truss not least as they appear ideologically opposed. Neither are known for keeping their mouth shut either. I find myself idly wondering whether the institutions which support them both in their current roles, monarchy and central government respectively, will survive the next few years as we’ve known them.
Agree with your sentiments…there is no credible plan. The failure to apply a windfall tax is utterly astonishing.
Whilst not wishing to dishonour the memory of the queen. Why on earth is parliament not sitting for 10 days at a time that needs proactive, considered government action? I would argue that by not sitting, they are dishonouring the queen’s memory. Workers of all other persuasions are carrying on.
Slightly tangential to the energy issue but I think it points to similarly flawed thinking and is, I believe, reflective of the government’s approach to the energy situation. It may also point to what people may have to do? Southern Water have apparently advised customers that are boycotting paying their bills due to the failure of the company to prevent environmental damage by illegally dumping sewage that they will send in debt collectors. They had a £90million fine imposed, their ceo (at the time) was paid over £550k in bonuses (on top of a £435k salary) and they have been ranked the poorest (of a bad lot) in terms of performance of the private water companies. Similar to the energy industry, how does any of this stack up or make sense if you applied common sense or applied a concept of fairness? Thus, you can only conclude that the government is wholly incompetent and/or that they are motivated by their own self interests (and interests of their donors / supporters). What needs to be done is quite evident to the ordinary person in the street…it is not actually very complicated. Simply applying common sense points to how we can sensibly address the energy issue. For example, start with changing Ofgen’s calculation which is flawed, impose a windfall tax and then apply a structured approach to addressing the clear flaws in the current system.
Where it may point is to what might need to be done if we are to avoid the worst of the consequences of the governments ineptitude, i.e., boycott payments. Of course, this would need to be tackled in a similar way to Scotland’s rejection of the poll tax many years ago if it is to successful. What I think the example of Southern Water suggests is that allowing the market to run our key services (water and energy certainly) is that the market is NOT more efficient…it is simply beholden to wealth extractors (politely referred to as shareholders). Accordingly, it does not provide a benefit to society, the economy or the environment in general. Maybe we do need to boycott payments to highlight clearly the utter lunacy of the current structure and the government’s so-called plans?
And, as a final thought. Get back to work government/opposition and cancel your completely unnecessary party conference season. You all profess to act in the public interest, etc. Truss emphasises that she gets things done, she delivers (god knows what but that’s what she says)…well, get on and deliver in the public interest! We’ve had incompetent government for years (that has brought us to this position), we’ve had a zombie government for nearly 2 months (arguably longer) and now parliament won’t sit for 10 days before their windbag season of self-congratulatory pontification. What have we done to deserve this coterie of dunces? (I know, we apparently voted them in via a completely failed FPTP election process and the vast majority of people only get their information via right-wing dominated media).
There is exactly zero need for a windfall tax.
If Trussed & the imbeciles that surround her, had gone for fast market reform- split the market into CAPEX (nuke, RES & hydro) & OPEX (fossil) then the issue of windfall profits – at least wrt electricity, would have fizzled like a damp Nov 5 squib. Obvs, this leaves the problem of fossil windfalls – but one needs to salami slice the problem & you have to start somewhaere (“so we started… there”).
Anyway, it won’t happen. In Eu-land the Energy council told the Commission (i.e. DG ENER) to speed up their market reform proposals. Won’t happen & my contacts are now pushing for the action to be address by a wider group within the Commission given that DG ENER if fuinctionally incapable of acting – being filled as it is with religious types (Our market which art in heaven). ……………Very much like Ofgem/BEIS.
I had a circular e-mail today from the former chief Ofgem economist – Grubb – even he has declared for fast market reform. Which tells you something. Of course this will not happen – given the country has erm… “more (media decided) important things on its mind right now”. If it is a hard winter the choice will thus be starve or freeze – still at least UK serfs can look back on an opulent coronation. I will watch (non)developments with interest.
Mr Parr,
I defer to your intimate knowledge of energy markets, and comment principally to agree wholeheartedly with your maxim that the prime solution is ‘fast market reform’ (such a policy of course completely undermines the whole neoliberal Conservative energy policy, so remains somewhat problematic for them to undertake).
I would still apply windfall taxes, even with fast market reform; because ‘fast’ will not be overnight, I suspect even with a fair wind, and there is unlikely to be a fair wind with so many powerful corporates with interests to protect, and weak (or blindly ideological) politicians in Government. A windfall tax is an Act of Security against backsliding on all sides; like the famous case of the criminal facing his imminent hanging, it concentrates the mind (of the fossil fuel sector) wonderfully.
If there is no fair wind, or no real reform (lets call it a Trusswash reform), a windfall tax is all we have. We have a rough quantum of what is at stake for the UK, from Bloomberg: £170Bn ($199Bn) of (mainly) windfall profit over two years. I keep repeating that figure here, only because – it is well worth repeating.
I agree with you John
And if it collects nothing, well so what?
Better to have a backstop
The delay by a month is convenient. By then it will be October, and “much too late to change course now!”.
I.e. it’s a deliberate tactic to prevent criticism.
Wholly agree. I guess my point – probably not very well put – is, why should we accept this? Maybe we do need to boycott or similar?
Thatcher’s policies have demonstrably failed – failure of many energy providers, the poor performance of the privatised water companies, etc., etc. The market is designed to benefit the wealth extractors at the expense of the common good. Why, in supposedly this successful, rich, ‘aspiration nation’ (almost feel sick writing it down) do we have homeless people, accept that c.15%+ of the population live in poverty (with more to come), that people are having to make a choice of heat or eat and so on.
Without going into the many options we could pursue. There are relatively quick, effective, environmentally-considerate options that could be applied in addition to the obvious financial option of applying a windfall tax and – as Richard has said many times – taxing the unearned additional profits gained from market manipulation (oil prices, etc.), profits earned by financial institutions through no entrepreneurial effort of their own (via interest rates), etc. We could, for example, drive a homes improvement campaign (insulation, solar panels, district heating, etc) at a fraction of the alternative policies – the cheapest, greenest energy is the energy we don’t use and we should demand and implement a profit cap on companies operating in the public services space (energy, water). I guess my point is that if the government can’t or won’t implement sensible policies in the public interest, I can only see us heading for more public pain, disruption, increasing strikes and possibly mass boycotts. The one thing that we can be certain of is that Truss’ policies (?) will not generate growth and will, like Thatcher’s privatisation policies, be doomed to failure.
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]
Sounds very much like one of Baldrick’s plans to me.
No news, I think, of a plan for those who have no access to mains gas and heat their homes and water with heating oil. For one thing that covers large areas of Scotland.
Heating oil was mentioned without any specifics
Since the plan, if you want to call it that, is to be funded from borrowing rather than any of the other possibilities aired on these pages I’d say that the Tories ultimate goal is there for all to see. Under cover of repaying the debt, I’d suggest that public services will be slashed further still thereby satisfying the political wet dream of the increasingly extreme right wing of the Tory Party and its advisors to be replaced by private suppliers.
It’s a disaster Richard. I don’t think they realise how close to collapse the third sector is.
I’m involved with a charity in Scotland whose Gas is provided via the NHS as negotiated through procurement Scotland. Our rate was increased by 350% in April. 350%! Our gas costs for the financial year are projected, at that rate to rise from £330,000 to close to a million. Simply put we will not exist come December without additional support. We can pass some of the cost on to customers, but most of them are charities and third sector organisations who are struggling with the other cost of living increases. Many of them have told us any increase in costs to them will shut them down.
And that’s just us! The local NHS are obviously having to grapple with the same energy price increase. How do they make it through the winter?
As bad as people think it’s going to get, it’s going to be much much worse.
The idea the government can shut down for ten days at this time beggars belief. These people are utterly unmoored from reality.
I think a great many people wonder what will happen in the New Year: the reserves run out by then and I remain incredibly worried
This could explain why Starmer has reneged on his plan to nationalise energy, etc.
The revolving door.
https://www.opendemocracy.net/en/dark-money-investigations/liz-truss-adviser-worked-at-lobbying-firm-for-bulb-energy/
The bit that relates to Labour is at the bottom of the article, so unless people read it all they wont get the point you are making – here is the quote
“ The firm also has close ties to the Labour Party, with several staffers who have worked for both. They include Chris Ward, who served as Keir Starmer’s former deputy chief of staff and is now a director at Hanbury. Meanwhile, Labour’s deputy leader, Angela Rayner, recently hired one of Hanbury’s associate directors.”
All I see is corruption.
It’s as if someone has helicoptered Washington into Westminster.
Thanks, but I think people on this blog read whole articles. We definitely have to have a longer attention span than your average twitter reader to understand Richard’s twitter threads all in one go.
By the way, are you Brian Fish who used to live in Bretton 50 years ago?
Interesting proposal from British Gas
https://www.theguardian.com/business/2022/sep/10/british-gas-cap-profits-cut-energy-bills-centrica-electricity
Shows a good grasp of The National Interest
Economic reality, I would say
Richard
From the Guardian article
“The company (Centrica) said it had seen an 11% gain in volumes of nuclear power generated in the first half of 2022. It said the price achieved for nuclear power had risen from £46.5 a megawatt hour in 2021 to £110.4/MWh.” Funny old word achieved.
And we were naive enought all those years ago to believe the retoric – that nuclear energy would be so cheap it wouldn’t be cost effective to bill consumers.
The high cost of nuclear in this country is only because the Tory state refuses to see it as public investment and wants to do it the ‘market way’ – recoup the investment (and charge for energy) through the customer, thus hiking up prices – surely?
Good article here, I think, from Caroline Molloy.
https://www.opendemocracy.net/en/liz-truss-cost-of-living-energy-bailout-price-cap-targeted/
Again, the government won’t take any notice. As she says, they have had plenty of time to sort this out. Energy poverty hasn’t suddenly been sprung on them. I notine enoughisenough have stopped their marches this weekend, but they’ll start again soon, as will all the other demonstrations.
This seems to be a common sense approach – perhaps coupled with the reductions suggested by Centrica/B Gas.