Friday, 12 August 2022

Labour's Energy Bill Farce

Last week, Rachel Reeves announced Labour's first measure to tackle the cost of living crisis and address spiralling fuel bills: cutting VAT on energy. You'll note not abolishing it, which is what Rish! Sunak has suggested, but reducing the percentage of the carge that heads back to the Treasry. A couple of hundred quid saved as the direct debits shoot up by thousands? Thanks Labour! A week on and several painful television interviews where shadow cabinet members can't bring themselves to say Keir Starmer hasn't done the rounds because he's on holiday, Reeves struck again last night with another policy.

She announced that Labour would outlaw the higher tariffs charged by pre-payment meters. Naturally, this appearing hours after my suggesting it is complete coincidence. Though in truth, props should go to Dawn Butler who argued for it and got it adopted by Labour in 2016. In other words, the shadow chancellor has plagiarised already-existing policy. Though Reeves wouldn't be Reeves if she didn't give this welcome measure a weak-ass twist.

The harmonisation of pre-payment and direct debit bills would see energy companies compensated by the government via fixes to the windfall levy (introduced by Sunak at Labour's urging). This would cost £113m between October and March, while saving those on meters, who are overwhelmingly people on low incomes, £184 over the period. This truly is pitiful. For one, why should energy companies receive monies to make up for the loss? E:On, for example, announced profits of £1.2bn this week. For too long, the big six have enjoyed surplus profits by forcing their poorest customers onto pre-payment. Having hammered them for years, Labour should explicitly position this as a punitive measure. If Reeves thinks it's "outrageous", and "unjustifiable and morally wrong", why give them anything in return for ending an overly exploitative practice? I think everyone reading this knows the answer.

In and of itself saving households £184 in the context of a £2,500 price rise since this time last year with possibly another £1,300 rise in January to look forward to is insulting. But to be fair, this is one proposal among many Reeves has supposedly been working on with Ed Miliband and Starmer. But why announce this now as some kind of teaser trailer for a blockbuster destined never to arrive? I suppose the thinking of the professional politics brains at HQ is trotting out one policy after another gives it some publicity when Liz Truss has taken a Trappist vow when it comes to tackling energy bills. The problem with this clever-clever approach to the news cycle is people will look and see it for the pathetic effort it is. The Tories are keeping mum, and what Labour is saying is no one in the shadow cabinet truly grasps the seriousness of the crisis. Nor, for that matter, cares.

Image Credit


Ken Burnett said...

This is BJ in full. I just think Blah, Blah, Blah, sunny uplands.. Judge for yourself.
No, because what I’m saying what we’re doing in addition is trying to make sure that by October, by January, there is further support and what the Government will be doing, whoever is the prime minister, is making sure there is extra cash to help people.

I think it is crucial to understand that, first of all, we realised for a long time that things were going to be tough and that’s why we put in place a lot of measures already.

The money has started to come through. I think it is very important for people to understand, most people have not yet received the help the government has already allocated, so over the course of the next couple of months you will see about eight million households get another £326, you will see everybody in October get help with the energy support scheme.

He claimed the government was taking both short and long-term action to address the energy crisis in a bid to “undo the tragic mistakes of the past”.

What this government is doing is now green-lighting nuclear energy when for the whole of the period of the Labour government not a single nuclear power plant was started. So, we are doing stuff in the short term and in the medium term and in the long term.

Thanks to his government, he claimed, the country is in a “robust economic situation” with “virtually record-low unemployment”.

Robert Dyson said...

Clearly they had to clear out any taint of Corbyn. The lack of connect I find incredible. They just think they will get elected next time because they are not the Tory Party, so why make any real commitments that would need a case argued?

Blissex said...

What if New Labour proposed a cut in stamp duty to help with energy bills, to give a better start on the higher energy bills to property buyers in their new homes? It would be perfect for taking votes from the Conservatives. :-)
If it were paid for by increasing N.I. contributions or reducing the 0% tax band, it would be even better, New Labour would persuade current Conservative voters they are really on their side. :-)

Blissex said...

«they will get elected next time because they are not the Tory Party»

That worked splendidly 1997-2005 for Tony Blair after the Conservatives crashed property prices in the 1990s. Despite being electorally toxic and losing 3-4 millions in 10 years, he kept winning a majority of seats as "Middle England" voters did not switch to the Conservatives, which they distrusted on "economic competence" (which to upper-middle class voters means "property").

«the country is in a “robust economic situation” with “virtually record-low unemployment”»

As usual the real achievements that matter of this government are not made explicit:

* 9% CPI and 12% RPI inflation are shrinking the real cost of mortgages by that amount.

* 3-4% mortgage nominal rates mean a real interest rate of negative 6% or 9%.

* Property prices and rent are booming by 15% per year, way ahead of CPI and still quite above RPI.

"Middle England" voters are delighted that inflation is making them so much profit entirely at the expense of "losers". How can New Labour criticize such a record of success? :-)

Bob Appleyard said...

starmer's pitch was corbynism without corbyn. bizarrely, we seem to somehow be getting corbynism without corbynism

Gordon said...

A more positive & long term measure is to start taking back control. This will cost but it is an investment and should be looked at in tha way ! Rgds.