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A prices and income policy

Douglas Carswell, fresh from his defection from the Conservatives to UKIP, recently won time to debate energy costs in Parliament yesterday. The transcript is here. It's not terribly exciting, but there was one rather delicious moment where the minister, Matthew Hancock felt obliged to respond to Carwell's taunts about Conservative policy on energy, namely that it was a "prices and incomes" policy:

...a prices and incomes policy for energy in 2015 will no more work than a prices and incomes policy has worked for anything in the past. Prices and incomes policies do not work.

As Hancock put it

By switching from a regime in which...subsidy is given out to whatever renewable technology was brought forward to a regime in which a controlled pot of subsidy is auctioned to ensure that we get the best possible value for money, we have made a change towards a market-oriented system.

So it's still a prices and income policy, but a different one.

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Reader Comments (22)

There is no free market when coal-fired power stations are not permitted to be built and when gas-fired power stations are not allowed to operate on a level playing field. There will never be a free market with LibLabCon energy policies, which all guide subsidies, in whatever form or using whatever bureaucratic language, to chosen technologies.

Dec 11, 2014 at 10:49 AM | Registered CommenterPhillip Bratby

There is also no free market when the energy decision makers/advisers in both Houses of Parliament, are financially connected to renewable companies!

Dec 11, 2014 at 10:58 AM | Unregistered CommenterCharmingQuark

We're getting close to a command economy with electricty supply. The Germans have already got there!

Dec 11, 2014 at 11:02 AM | Unregistered CommenterCapell

The aim is to place control of electricity, heating and transport into the hands of an Oligarchy, the new Aristocracy.

Education is to be withdrawn from the masses who will be forced into the power-starved inner cities to die.

The counter-revolution is under way but it's taken 5 years to trigger it, since ClimateGate.

Dec 11, 2014 at 11:07 AM | Unregistered CommenterNCC 1701E

So they are "auctioning off" the subsidies.

Oh, then that's all fine and dandy then. What muppets.

Dec 11, 2014 at 11:20 AM | Unregistered CommenterGeckko


Yes indeed; only the chosen technologies are allowed to take part in the subsidy auctions.

Dec 11, 2014 at 11:32 AM | Registered CommenterPhillip Bratby

Actually it is worse, the likes of Ed Davey are bribing the Energy Companies with our money to favour renewables. There is bribery as in BaE and Arabs and there is corruption , the latter by State Officials Who are therefore guilty of malfeasance in Public Office. They are not above the Law and we are not a third world Country....yet!!

Dec 11, 2014 at 11:42 AM | Unregistered CommenterDerek Buxton

For those of us just waking up in the former colonies ...

Prices and incomes policy: voluntary or statutory regulation of the level of increases in prices and incomes.

Dec 11, 2014 at 11:59 AM | Unregistered CommenterSpeed

Lying King Canutes
.... say it fast

Dec 11, 2014 at 1:08 PM | Registered Commenterstewgreen

@ Derek Buxton
Looking from the outside, it seems close to being a two-and-half world country.

Dec 11, 2014 at 2:29 PM | Registered Commenterdavidchappell

That's all I need - another fact hunt.

Dec 11, 2014 at 2:30 PM | Unregistered CommenterAlan Reed

The technically illiterate Minister spouted the usual gobbledygook, not providing any real answers as to why energy prices have rocketed. We know, but like the rest of the green blob, they will not tell the truth, living in the CAGW dream world of never ending subsidies. As long as they are warm and well fed, never mind the Public at large, they can pay.

Dec 11, 2014 at 4:25 PM | Unregistered CommenterShieldsman

Matthew Hancock, our local MP, and I have discussed energy policy at some length over the years, well before he became the |Minister with responsibility for keeping the lights on. The last time I met him, just before he got this job, he came bouncing up to me and told me that solar was the way ahead. yes, i told him, but only if we can find a way of storing the energy. Yes, yes, we'll have to store the energy he said quickly, but it was obvious that this had never occurred to him.

Oxford PPE, favoured chum of Osborne, groomed for future high office for no reason that I can see, we're going to have hard fight in West Suffolk to cause him grief next May -- he'll have a lot of backing. But I ask you, the Minister for energy with no knowledge of the real world. We can't go on like this.

Carswell's mention of solar is disappointing -- German experience put the capacity factor as 6%. without massive subsidies this is not going to work.


Dec 12, 2014 at 6:30 PM | Unregistered CommenterJulian Flood

Julian Flood - you may be better placed than you think.

Handcock has been wheeled on as the defending Conservative fall guy on numerous recent political chat shows, and for his pains, now saddled himself with a nation-wide terrible shifty-eyed public image problem. .

Dec 12, 2014 at 9:40 PM | Registered CommenterPharos

Anyway - out here in Realityland, oil has dived below $60/barrel - which not only has completely buggered the government's confident predictions and calculations - but which the 'Indy' and its offshoot, the 'I', don't see as good news for mankind, but manage to spin cheap energy as disastrous....
I smell 'green' vested interests - oh, and all those hundreds of delegates at Lima (who presumably walked or cycled to get there) are once again having difficulty agreeing a form of words to make out that the whole thing wasn't, as it always is, a complete waste of time, money and resources....

Dec 13, 2014 at 2:10 PM | Unregistered Commentersherlock1

What fools we mortals be.

Dec 14, 2014 at 6:02 AM | Unregistered Commenterstan stendera

Decc "saves" us money on our household bills by using our own money to buy ourselves insulation and new boilers,
Industry faces the full cost which decc estimates at 23‰ by 2020 with oil at 200 dollars a barrel. With oil at 60 dollars the full cost of Decc's folly will be enormous.

Dec 14, 2014 at 8:06 AM | Unregistered Commenterdave

While Mr Ed trumpeted imagined savings for the consumer, the actuals rise in electricity costs were hidden, apparently kept secret because they were "thought to be confusing". To Ministers?
"Official figures – initially withheld by ministers – show steep rises in the price of electricity by the end of the decade to pay for the Government's policies to tackle climate change

The cost of household electricity will rise by as much as 40 per cent by the end of the decade because of the Government's green energy policies.
Official figures — initially withheld by ministers — show an alarming increase in the price of electricity caused by generous subsidies to wind farms as well as other policies.

An average household is expected to pay as much as £250 more for electricity – mainly through consumer subsidies – to pay for the Government's green energy schemes, while an electrically heated house could be as much as £440 a year worse off.

And by 2030, when thousands of planned offshore wind turbines are finally operating, the burden will be even greater, the numbers show. The average household could be paying an extra 60 per cent for electricity – equivalent to £350 more a year.

Medium-sized businesses will be hit very hard, according to the new data. On average such companies will see electricity bills rise by more than £500,000 a year – a cost likely to be passed on to consumers.

The figures were made public last week by the Department of Energy and Climate Change (DECC) following a Freedom of Information request by campaigners.

The information was initially prepared for an official DECC report – released at the beginning of November – which claimed that the average household fuel bill had fallen by £90 thanks to the "impact of DECC policies".

But the tables showing the actual cost of green policies on future electricity prices for households and businesses in 2020 and 2030 were kept secret because they were "thought to be confusing".

Their release now will embarrass ministers, who are accused of presiding over an expensive consumer subsidy system"

Dec 14, 2014 at 2:48 PM | Unregistered CommenterMick J

So it's still a prices and income policy, but a different one.

How do you come to this conclusion? Going by the minister's statement (making no comment on what the reality may be) it seems quite clear that the new policy is not a prices and income policy.

Dec 14, 2014 at 3:34 PM | Unregistered Commenteranonym

"So it's still a prices and income policy, but a different one."

A better one, to be fair. And I can't believe there are many Tory MPs who believe that even a better prices and incomes policy is a good idea. But as long as they are in coalition with the LibDems, who control DECC, they are stuck with one.

The depressing thought is that next year Labour and the SNP will almost certainly make gains which will allow them to show us just how much worse a prices and incomes policy can be.

Dec 14, 2014 at 10:02 PM | Unregistered Commenterad

Dec 14, 2014 at 2:48 PM | Unregistered CommenterMick J

Yes, but electricity is already twice as expensive as it needs be, and it is expected to increase by a further 40% on top of that already existing needlessly high price..

The cost of supply, is only 50% of the bill.

25% of the electricity bill is infrastructure investment. This is mainly coupling the windfarms to the grid (from far distant places) and taking steps to balance the grid. So this 25% of your bill is the direct result of the green energy/renewable policy.

25% of the bill is sibsidies for insulation, double glazing, new boiler replacement etc, and subsidising those in fuel poverty. If bills were lower, there would be far less in fuel poverty so the subsidy element could be reduced. Nearly all of this is the direct consequence of the green renewable policy since if electricity prices were lower, people would be less inclined to waste money on double glazing and cavity wall insulation (which create prolems of their own since, for example, old housing stock relies on being drafty to prevent damp issues).

Of the remaining 50%, it is only this fraction that relates to the costs of generation and distribution. But even this part is higher than it need be since generating companies are forced to buy part of the energy from expensive windfarms etc. If they were able to buy their enegry from coal and gas powered generation, the cost of supply would fall, especially if the Government was to withdraw its carbon floor price 9that needlessly increases the cost of fossil fuel generation).

If the UK Governmenet had not interfered in the energy market electricty prices would today be less than 50% what they currently are.

How the government can claim that its actions have kept bills down beggars belief. Infact, any MP claiming this should be prosecuted for deception. The consumer is paying a heavy price for this silly policy (and let us not forget that it does not even result in the meaningful reduction of CO2 emissions), and deception of politicians.

The sooner the MSM explain what is truly going on so that the consumer can see the full price and implications of this madness, the better.

Dec 15, 2014 at 9:33 AM | Unregistered Commenterrichard verney


How is it a prices and incomes policy? 'Prices and incomes policy' is not a synonym for 'government market intervention' (still less 'government market intervention of which I disapprove').

Dec 16, 2014 at 9:01 AM | Unregistered Commenteranonym

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