Labour plays the Soviet card

Ed Miliband: The Problem, not the Solution

Ed Miliband: The Problem, not the Solution

Labour’s energy price-freeze proposal harks back to the worst days of Labour’s wage-and-price controls, and before that to the disastrous efforts of the Soviet Union.  Government interference in markets always does more harm than good.  Imposing arbitrary price caps removes the incentive for suppliers to supply, and for investors to invest.  The empty shelves of the Gum Department Store in Moscow were legendary. 

Already Labour’s off-the-cuff proposal has been widely condemned by the industry and business groups.  Centrica has reportedly said that it would consider leaving the UK if threatened with a price cap.  It would certainly not invest in the UK.

And how would energy companies react?  If faced with a likely Labour victory, they would simply raise prices ahead of time to cope with any rises foreseen for the 20-month period.  The measure could well make prices even higher than they otherwise would have been.

Arguably most of the problems we face in the UK energy market today are the result of government meddling.  If Labour’s plan looks like an off-the-cuff knee-jerk proposal that hasn’t been thought through, so did George Osborne’s Carbon Price Floor, a reaction to the failure of the EU’s ETS trading scheme to deliver higher prices and to incentivise low-carbon investment.  Osborne never thought to consider that EU industry was disadvantaged already through Brussels’ energy policies, so he decided to disadvantage British industry even further.  Not a smart move.

Meantime the industry has to cope with a whole series of measures – renewable obligation certificates, the ETS itself, the Carbon Reduction Commitment, Feed-in Tariffs, Capacity Payments.  The list goes on.  Potential investors look at Germany and see that Angela Merkel, in a panic response to the Fukushima incident, decides to close down the whole of Germany’s nuclear fleet.

But nuclear energy is a 60-year investment.  Who is going to invest ten billion pounds in a project that can be closed down at the stroke of a pen?

The same principle applies in the renewables sector.  Personally, I am delighted that investment in renewables is under threat.  But it’s the same problem.  The government’s mixed signals on wind and solar (blowing hot and cold, if I can put it like that) make investment exceedingly difficult.  OfGem has warned of potential blackouts, and called for more investment in generating capacity.  Regulatory meddling makes that hugely difficult.  Labour’s thoughtless new policy proposal tips a new load of ordure into already muddy waters.

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10 Responses to Labour plays the Soviet card

  1. cornwallwindwatch says:

    Reblogged this on Cornwall Wind Watch.

  2. This is not only a dishonest but a cruel policy. Miliband knows he, as introducer of the CC act, is the single most guilty politician responsible for the 25,000 fuel poverty deaths each year and is now trying to make it worse.

    Your point about future seizure of nuclear plants is a good one – we need a written constitution which should include any extraordinary measures such as this, or such as committing the country to long term payments well beyond on parliamentary term, requiring a larger than 50% vote of approval. We should also put more emphasis on PR which, apart from being the only real democratic electoral system, is the only one that can prevent total power falling into the hands of either Tory or Labour on 30% of the vote or even less, which clearly lays the entire country under the threat of rule by nutcases and thieves.

    I have sent a letter on Miliband’s promise to most major papers but, since it supports UKIP, I doubt it will be published.

  3. David says:

    I repeat my message from another of your great articles, Roger.

    Labour are the problem, not the solution.

  4. Me_Again says:

    “Arguably most of the problems we face in the UK energy market today are the result of government meddling.” Certainly, the conservative of the 80’s have a lot to answer for.

    Arguably, privatization of strategic national assets is the root of the problem. We should have gone down the ‘mutuals’ route. Modern management and working practices combined with a not for profit company. It costs what it costs and that’s what the people will pay for their energy. Why is that such a difficult concept? Ah yes, no lobbyists, no shareholders, no bankers.

    You take the shareholders out of the equation and the problem solves itself.

    In addition, investment would not be a problem would it? We wouldn’t and couldn’t be facing blackouts because of lack of investment either.

  5. JohnPatricke says:

    Yesterday or the day before wind was producing 0.12 GW.

    It’s because of maniacs like Miliband that I’ll be spending my next few weekends writing letters like this:

    “Good Morning,

    As a resident of Wester Ross I feel that I have a duty to inform you of a recent planning application for a 253ft high turbine in Achiltibuie.

    This is in the remote and sacrosanct North West Highlands and as such it is particularly farcical (http://wam.highland.gov.uk/wam/applicationDetails.do?activeTab=makeComment&keyVal=MPO6XEIH7R000 – If the link fails, just type in Achiltibuie in on the planning section of the site and scroll down and you will see the application).

    This turbine would be 25m higher than Nelsons Column and 16m higher than the Scott Monument, to put the scale into perspective. Here are a few points that I kindly ask you mull over:

    • This would be smack bang in the middle of the Assynt-Coigach National Scenic Area and it would overshadow one whole side of the Wester Ross National Scenic Area.
    • This would be located on deep peat. Aberdeen University – in a study commissioned by the SNP – said that building turbines on peat is ‘like chopping down a rainforest’.
    • This would be in an area where both Sea Eagles and Golden Eagles, to name but two types of birds, thrive.
    • It would be clearly visible from An Teallach, a mountain thought of by many to be the finest Munro in Scotland.
    • It would be visible from virtually all of Gruinard Bay – a soon to be Marine Protected Area (in large part because of all the birdlife that flourishes in this area).
    • It would be clearly visible from Mellon Udrigle. This beach is seen by locals and tourists alike to be the jewel in the crown of the North West Highlands.
    • This would damage tourism. The conclusions about tourism spend are drawn from two university studies (the first commissioned by the Scottish Government; the second, a submission to the Scottish Parliament’s 2012 Renewables Inquiry); a private sector survey in 2012; VisitScotland’s own 2002 research; and a recent poll conducted for Scottish Renewables.

    Believe it or not, it would be right in the middle of this image: http://3.bp.blogspot.com/_xg4299Pxz4w/S98CuoFDJbI/AAAAAAAAIOA/kSEp1W5Qb4A/s1600/Mellon+Udrigle+008.JPG

    Please help. Please object. Please spread the word.

    Thank you.

    John”

  6. Techno says:

    I think this is good, because Miliband is showing his true colours. Labour learned to hide their true nature to win power in the 1990s, but it is starting to show through now.

    Also Miliband has no experience in running anything (like his own small business) and this is showing through now as well.

    As Napoleon said: never interrupt your enemy when he is making a mistake…

  7. Labour’s great strengths are these:
    The boundaries are in their favour quite firmly, thanks to the LibDems and their meanness.
    There are a lot of people, especially up north, who depend on the dole, government contracts, government pensions and government big spends. They vote Labour as a soft touch on such things.
    Then there are the Unions who pay some 90% of the Labour Party expenses. Looking at their leaders, I can see that they are unreconstructed 1970s people.
    And then there are the leaders of Labour: deeply tainted, proven incontinent with our money, they seek re-election.
    And the man at the top is a straight 1970s Socialist.

    Meanwhile, on the right, we have Mr Cameron – ’nuff said.
    And the vote is now hopelessly divided with UKIP (I shall be voting that at the moment.)

    2015 will be an interesting election, won’t it.

    • But precisely those, not exclusively northern, people dependent on the state are the ones most affected by the obscene rise in electricity prices. The ones in the north are also more likely to suffer blackouts because the interconnector to French nuclear electicity is to the south.

      I believe that a UKIP commitment to aim for at least non-EU world average growth (ie 6% annually) which does require cheap electricity (Miliband’s scarcer electricity would actually push us deeper in recession) would trump virtually everything. Even those on the dole or in low grade government jobs should vote for that, unless they actively never want a productive job, which is very few.

    • Me_Again says:

      “There are a lot of people, especially up north, who depend on the dole”

      Can tell you’re a ‘mamby pamby southern softy’ can’t we? I suggest you need a little ONS evidence to make that rather stupid comment.

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