Friday 26 August 2022

The Energy Price Rise Silence

As promised, Ofgem raised the energy price cap again. From the start of October gas and electricity will have standing daily charges of 28p and 46p respectively. This is up from 3.6p and 14p before prices started galloping away. Per kilowatt hour, that will be 15p and 52p. The average household bill's increasing from £1,971 to £3,549. This is nothing less than a catastrophe. People are going to die while millions face destitution, and tens of thousands of small and medium-sized businesses are going to close. Public bodies also face a cash flow crisis and without injections of funds will cut jobs to keep afloat, exacerbating unemployment at the worst possible time. Yet on this miserable day we hear nothing from the government.

That's not strictly speaking true. The soon-to-be-ex-chancellor Nadhim Zahawi did the TV rounds this morning telling Britons to conserve energy. In 21st century Britain, wearing woolly jumpers is the official advice to ward against the winter cold. Of our holidaying Prime Minister, we're told that the country should simply lump it. Don't the ingrates of these islands realise the Ukrainians have it so much worse?

And Liz Truss, who is certain to be the next Prime Minister, simply regurgitated everything she's already said on the Tory hustings trail. In a statement put out on Friday morning, the campaign team says,
As prime minister, Liz would ensure people get the support needed to get through these tough times. She will immediately take action to put more money back in people's pockets by cutting taxes and suspending green energy tariffs. This is on top of ongoing work such as the Energy Bills Support Scheme, which will see a £400 discount paid to consumers from October, and the £1,200 package of support for the most vulnerable. Liz will work flat-out to deliver long-term energy affordability and security, unleashing more energy by maximising our North Sea oil and gas production - helping keep bills down in the future.
The statement also said she would not be available for interview at all.

There you have it then. Not so much a case of the Tories being asleep at the wheel while a crisis builds, but one of wilful negligence. If one wanted to chance an uncharitable reading, an argument could be made that this serve some political purposes. With the government about to crash into a huge wall of opposition, letting the crisis anxieties run amok might sap the confidence necessary for collective action. The spectre of mass unemployment is never a friend of rising militancy. For while Tory ineptitude is legion, the one area they've shown a great deal of skill - particularly during the acute phase of the pandemic - is in governance.

But the explanation for saying nothing has a more mundane explanation: the Tories don't know what to do. They are aware the incoming government has to move fast, otherwise the entirety of Truss's time in office will carry the miasma of failure to the next election. But the risks, as they see it, is do too much and their imagined mass audience for Thatcherism would recoil at the "socialism" of their party. It can also raise the horizon of doing things differently, which absolutely must not happen; the Tories have spent the last year wiping away the legacies of Covid and Corbynism. Do too little and the country risks becoming ungovernable. If the mass non-payment of bills takes off, the Tories will be lucky if this is all they have to face off against. According to Alex Wickham's Bloomberg piece, some in the Truss camp want to limit support to the most vulnerable and, of course, pensioners. Others more wise to the politics of the moment would like to see something of the order of the job retention scheme, acutely aware Labour's price freeze has raised the appetite for universal help.

One such scheme that has already been presented to Kwasi Kwarteng, heir presumptive to Number 11, has come from the energy companies themselves. The suggestion is the companies freeze the bills in exchange for a £100bn Treasury loan. This would then be paid back over time by, you guessed it, adding levies to energy bills. The gossip merchants don't say what Kwarteng thinks, but it is a very Tory-sounding scheme. In the end, we still end up paying for the crisis. But the sum involved is enough to make Conservative blood run cold. If this is funded by quantitative easing, the worry is what this would do to inflation. And if it's done through government borrowing, how much does that add to interest payments on state debt? And, politically, it shows that the state can do things - which is the very opposite of where Truss and her baggage wagon want to be.

This is a crisis of the Tories' making. They can blame Putin as much as they like. They're the ones who've gutted the country's gas storage capacity, they are the ones who've cut down on domestic generation because buying from abroad was the easier option, and it is they who constantly claw back public funding for renewables, making sure the UK's dependence on fossil fuels lasts that much longer - with Truss's promised scrapping of the green levy another example of their criminal short-termism. But the nature of the crisis is such that they're quaffing in the last chance saloon. If Truss doesn't come up with something universal, it's not that the Tories just face losing the next election - their long-time decline, temporarily slowed by Brexit and the 2019 election, might accelerate. The cost of living crisis is existential for the Tories too, and it could mark their end as the natural party of government. They can't escape the high stakes either.

12 comments:

Shai Masot said...

Starmer may be a crap, Tory-lite, stiff, unimaginative and wooden general. But he's a lucky general. No-one could ever deny that.

David said...

They seem to be doing their level best to kill off their core demographic, so it could get very existential indeed.

Old Trot said...

Shai Masot. It may appear that Starmer/Mandelson and their Blairite chums are 'Lucky', and will simply have to say nothing, offer nothing, and yet the prize of government office will fall into their corrupt, careerist, laps as the crisis overwhelms the Ayn Randist Tories. But the sheer scale of the now rolling global inflation (and capitalist stagnation) crisis for all but the mega rich will soon overwhelm a NuLabour 2 (probably in coalition with the Lib Dems) government too. Because , for the Labour Right, the entire purpose of government office is merely to stick their corrupt snouts in the pork barrel of government largesse. They have no policies or programme whatsoever to combat the ever-rising crisis. Because that requires mass renationalisation and central state-led PLANNING, and serious taxation of the rich and corporations. NuLabour , nor the Lib Dems, will never do that. Forward to a neoliberal, very authoritarian, National Government eventually ? In Italy, ahead of the pack in crisis terms, the 'centre ground ' has collapsed and it looks like a Far Right government is in the wings. The cost of the Guardianista liberal 'Left' helping the Right to shaft Corbyn and mild social democratic 'Corbynism' will be paid for in blood by us all. This article from today's Morning Star spells out the scale of the crisis for UK politics : https://morningstaronline.co.uk/article/mass-crisis-almost-upon-us-%E2%80%93-left-ready

It is a sad day when the old Tankies of the Morning Star and CPB are one of the few media outlets setting out the real facts - and your blog too , Phil, I have to say.

Anonymous said...

Thank you Old Trot, perfectly put.

Blissex said...

As usual our blogger raises many interesting points, but as usual I have a more cynical take...

«Nadhim Zahawi did the TV rounds this morning telling Britons to conserve energy.»

As usual if there is a fuel shortage in the absence of rationing the low bidders have to consume less energy, the only choice is whether the UK government uses subsidies to turn every UK consumer into high bidders, beggaring other european states, or whether vice-versa happens. Could a New Labour UK government outbid the german government for whatever fuel supplies are available? Funny thought.

«"unleashing more energy by maximising our North Sea oil and gas production - helping keep bills down in the future."»

This is government demagoguery, as the scottish reserves are finite and not huge, the higher the production the shorter that future.

«see something of the order of the job retention scheme, acutely aware Labour's price freeze has raised the appetite for universal help.»

Opposition demagoguery is also easy, or even easier, here New Labour has not made any price freeze, they have just talked about it knowing they will not have to do it. Starmer might as well promise not a mere price freeze, but a price halving, plus a pony for every little girl.

https://examinedlife.typepad.com/johnbelle/2004/03/if_wishes_were_.html
https://www.gocomics.com/calvinandhobbes/1987/01/13

«This is a crisis of the Tories' making. They can blame Putin as much as they like.»

I personally think that people on the left should be honest because truth is on our side, and this crisis is shared by many other countries, where the Conservatives have not been in power, so clearly it has not been made by the Conservatives.

The european energy crisis has been made by the USA sanctions against the largest and cheapest (even if only 4-6 times cheaper than the overseas alternatives) european energy supplier (leading to a fantastic boom in the profits and share prices of USA energy exporters).

Blissex said...

«The average household bill's increasing from £1,971 to £3,549. This is nothing less than a catastrophe. People are going to die while millions face destitution, and tens of thousands of small and medium-sized businesses are going to close.»

The average rent is increasing 15% from around £14,000 to around
£16,100 which a massive improvement in income of £2,100 that
pays for rather more than the £1,578 difference between £1,971
and £3,549. Rejoice! Rejoice! :-)

«Not so much a case of the Tories being asleep at the wheel while a crisis builds, but one of wilful negligence.»

I would not call keeping mortgages rates at -6% to -9% in real terms, and helping mortgages shrink in real terms by 9% to 12% a year "negligence", at least from a class war perspective.

«otherwise the entirety of Truss's time in office will carry the miasma of failure to the next election.»

Only if property profits fall.

Blissex said...

«otherwise the entirety of Truss's time in office will carry the miasma of failure to the next election.»
«Only if property profits fall.»

I'll try to explain this again: they have an 80 seat majority, and they could hardly care less about what happens to those "losers" and "scroungers" who don't vote for them, and they know very well that years of "yellow vests" in France have not taken down Macron or resulted in any significant change.

Some Conservatives, following the "Westminster model", don't even care that much about voters in their safe seats:

Stephen Bush "Politics" 2018-03-16 (NEW STATESMAN)
«One Tory minister in a safe seat told me that when she used to ask Osborne for something, he would first ask her how big her majority was — and then reply, with a smile, that it was too large for her enquiry to be worth considering.»

And that they don't care about people who don't vote for them was a complaint by Ian Duncan Smith:

https://www.telegraph.co.uk/news/politics/12199805/IDS-sparks-rift-at-heart-of-Tory-party.html
«He said he resigned because he lost the ability to influence where the cuts will fall, adding: “The truth is yes, we need to get the deficit down, but we need to make sure we widen the scope of where we look to get that deficit down and not just narrow it down on working age benefits [...] otherwise it just looks like we see this as a pot of money that it doesn’t matter because they don’t vote for us, and that’s my concern. [...] This is not the way to do government.”»

But it is a way to do electoral politics...

Old Trot said...

Blissex, dearie me, you really need to stop posting up this 'nothing can be done' neoliberal, smug, drivel, and 'wake up and smell the coffee' on what now lies directly ahead, economically and politically. We face , suddenly, imminently, unprecedented for a generation inflation levels, collapsing real incomes in the 30% area over the next 2 years alone for most UK citizens, and looming small and medium business failures at a colossal level within mere months. This will lead to directly resulting mass unemployment, and MILLIONS of people having to choose eating or heating as real choices this winter, And yet you are still wittering mindlessly endlessly on about a supposed super vibrant property and property rental market , apparently that will sail on unchanged amidst this mayhem ! Your posts nowadays are pure fantasy neoliberal trolling, give it up lad.

Meanwhile, back on planet earth, the general public reasonably expect the UK government to use the potential vast powers of a nation state with a sovereign currency, to ameliorate this partly global, partly very UK specific, looming disaster. By using selective key renationalisations, state direction of key industries, huge windfall taxes, major extra taxes and closing of loopholes of the superrich and corporations, massive direct financial assistance to businesses and citizens, and all available other governmental tools. But the Ayn Randist current neoliberal , shrink the state, Tories will do none of these things, certainly not in any significant form. Even the previously announced 'windfall tax' was a pure con - easily offsettable by the multinational oil/gas companies supposed 'investment expenditure'. And Starmer/Mandelson's New Labour mark 2 also is terrified of being accused by the Tory press of being 'Left Wing ' in any way (ie, deploying the standard economic weapons any serious government can deploy in a crisis like this - as even the Tories did periodically throughout the pre Thatcher postwar years).

There will eventually be blood on the street , looting of food stores, and and huge deaths through hyperthermia and even starvation, particularly amongst older poorer pensioners, this winter and beyond from this crisis. The utter failure of the current entire political professional class of politicians will open up a huge opportunity for the rabblerousing fake 'radicals' of the Far Right, as it has across Europe. Dark days lie ahead, and the idea that the prospect ahead is rosy for buy to rent landlords and even well off Tory homeowners , is beyond a joke. The Tories, Lib Dems, and the corrupt Tory-lite Blairite centrist neoliberals of Labour have sown the wind over the last 40 years or so, and we will all now reap the whirlwind.

Jim Denham said...

Shome mishtake shurely? Macron is reported to be holding down energy bill increases to 4% and fully nationalising the already partially-nationaised energy company EDF: even the Morning Star has reported this – but surely it can’t be true because the same Morning Star (and the rest of the “left” pro-Bexit campaigners) told us this would be impossible within the EU.

Old Trot said...

Inflation in the UK is about to surge to generationally unprecedented levels , tens of thousands of small businesses are about to collapse because of stupendous increases in their power and other costs, and hundreds of thousands will consequently be thrown out of work over the next year, and many will freeze to death over the winter - but all Jim Denham can contribute is an ignorant , incorrect, jibe about BREXIT and the Morning Star !

And of course Jim Denham is , as usual , completely wrong. Anyone with any understanding of both the overall rigidity, but permitted small scale flexibility, of the neoliberal EU's rules should know that those generally rigid State Aid and Competition rules can, TEMPORARILY ONLY, in parts, be set aside by national governments when special severe circumstances require it. Hence the UK government regularly , but temporarily, renationalised franchise routes of the rail system as the private firms running them collapsed or proved utterly incompetent. But, under the EU's 4th Rail Directive of 2013, those nationalised routes have to be put back into private franchise hands as soon as possible. So it is with the French taking temporary control of its EDF power generator, and imposing limits on tariff increases. This is merely fulfilling the permitted limited role of national governments under the neoliberal EU framework, ie, as a 'ringmaster' and overarching 'gridlock' remover, to ensure the smooth running of the overall free market, hyper competitive, neoliberal system which the contemporary EU maintains. This is a hugely different, very limited, state government role compared to that required, for instance , by the policy proposals in both the 2017 and 2019 Labour Manifestos. A socialist government, even an only very mildly radical one (as Corbyn's would have been) , would need to be able to exert PERMANENT interventionary economic measures into the operations of the domestic capitalist market place, with national economic planning joining this together, and to be able to fully renationalise entire key sectors of the currently privately owned capitalist economy including the banks. None of this can be done under EU rules.

Your astonishing ignorance of even the basics of how the EU actually works makes you look like a naive 5th form liberal debater, Jim, not the seasoned AWL Marxist you mistakenly seem to view yourself as.

Jim Denham said...

"And of course Jim Denham is , as usual , completely wrong. Anyone with any understanding of both the overall rigidity, but permitted small scale flexibility, of the neoliberal EU's rules should know that those generally rigid State Aid and Competition rules can, TEMPORARILY ONLY, in parts, be set aside by national governments when special severe circumstances require it" ... waffle, waffle, waffle: Old "Trot" (more like, "Old Stalinist"): has thge French government nationalised EDF: yes or no?

A simple yes or no answer will suffice.

Then shut the f**k up, and admit just how stupid you are, eh?

Old Trot said...

Dearie me, the astonishingly ignorant wannabe Marxist sage , but Guardianista Left Liberal, Denham, appears to have had a hissy fit ! Try actually reading my previous post, Denham - the facts are all there for you Just as Gordon Brown short term took a purely share-based controlling interest in some collapsing banks after the 2008 crash to save them, Macron has done the same with EDF (The French government always had a big share stake). Just as with Gordon Brown's short term 'nationalisations', Macron will give up this controlling share interest as soon as possible and the crisis has past. All perfectly allowable under EU rules, but NOT the permanent genuine nationalisation a Left government would need to implement a long term radical Left economic plan. You seem to have a severe difficulty grasping perfectly simple facts Denham. By the way, try to avoid crude school playground abuse in debate, It doesn't help your case at all.