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« The environment correspondent's standards | Main | A convocation of rogues »
Friday
Mar132015

Labour's energy wheeze

The election is approaching and politicians across the land are trying to outbid one another their attempts to come up with the most eye-catching (for which you should read "foolish") wheezes for the future of the country. Ed Miliband is something of an expert when it comes to foolish and he and his sidekick Caroline Flint - the Dastardly and Muttley of the energy debate - have decided that the way forward is to have prices in the energy market set by a bureaucrat.

A Labour government would give the energy regulator new powers to force firms to cut electricity and gas, Ed Miliband will say.

It follows Mr Miliband’s pledge to freeze energy prices for two years if he is elected.

The Labour leader will use a speech to say that if he wins the election he will pass a new law giving Ofgem a “legal duty to ensure fair prices this winter”.

It's stupidity piled on foolishness piled on insanity. It's bonkers, all the way down.

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Reader Comments (50)

I remember Wilson's hapless "Minister for Drought" in 1976 whose first function was to watch the rain fall that autumn.
I would have thought that after his foot-in-mouth pronouncement about freezing energy prices only to see oil prices more than halve within weeks, Miliband might be a little more cautious about what he says on energy (or indeed any other subject).
I'm not sure about Dastardly and Muttley though. Pinky and Perky perhaps?

Mar 13, 2015 at 10:08 AM | Registered CommenterMike Jackson

Dafter even than it appears. In a previous announcement on energy policy, Miliband said he was going to abolish Ofgem!

Mar 13, 2015 at 10:15 AM | Unregistered Commentermitcheltj

Stupid politicians have ruined this country in so many different ways over the years. Sadly, the latest crop appears to exceed the conventional definitions of stupidity.

Mar 13, 2015 at 10:16 AM | Unregistered CommenterSchrodinger's Cat

When are those who govern going to address those they govern as adults? Or are the great majority of the population no more than half-witted children, who can easily be taken in? In which case, why do they get a vote? Or why is our Fourth Estate (no doubt 'envy of the world') not asking hard questions of the political elite, explaining the humbug and deception so even the half-wits can understand? Can our polity really go on in this way?

Mar 13, 2015 at 10:16 AM | Unregistered Commenterbill

Miliband is foolish, for sure, but he is also dangerous. He will always find followers in the Labour Party who will willingly support his brand of Marxism. First we hear that Labour is on the side of business, then we get this ill conceived rubbish. If this man gets the keys to number 10, it will be regulation, regulation, regulation.

Mar 13, 2015 at 10:19 AM | Unregistered CommenterPeter Stroud

Now we can see the results of many years of a dumbed-down education system. Labour can get away with this utter stupidity because a large proportion of the electorate do not understand what is going on. Whatever these politicians touch turns to **** (fill in).

Politics is the art of looking for trouble, finding it everywhere, diagnosing it
incorrectly and applying the wrong remedies

Groucho Marx

Mar 13, 2015 at 10:22 AM | Registered CommenterPhillip Bratby

We get back to the saying that "you can feel some of the people some of the time" and all that. Democracy sometimes takes a wrong turn, but eventually voters will see through this flim-flam. For extracting revenge, there's nothing like a voter who realises that she's been cheated, been mistreated etc.

Mar 13, 2015 at 10:24 AM | Unregistered Commenterrubberduck

Dear old Red Ed. Here is a link for him to the Labour Manifesto in 1924. Perhaps he can just cut and paste it for 2015:

""The development of the present chaotic Electrical Generating Stations on the lines of a National System, uniformly standardised with transmission lines linking up town and country, with the primary object of providing cheap power for industry - instead of profit for shareholders - and cheap and convenient light for house-holders everywhere.""

Note the opening paragraph:
"Labour's appeal to the people
The Labour Government, defeated in the House of Commons by a partisan combination of Liberals and Tories, appeals to the People.""

Good that Ed has managed to get out of the 19th and into the 20th century.

http://www.labour-party.org.uk/manifestos/1924/1924-labour-manifesto.shtml

Mar 13, 2015 at 10:26 AM | Unregistered CommenterIvor Ward

Good old RED ED,

FFS, he thinks all of us have forgotten that [climate change Act] in the first place that RED ED - he was directly responsible for the high prices of gas and electricity by rigging the market forcing the green agenda on the supply companies and through our membership of the EU where EU spot gas prices artificially fixed [to suit corporates - see Gazprom] are some of the highest in the world. Further, where the EU hand in glove with the UK loony left-green activist partnership all heavily sponsored by taxpayer largesse to kill off all alternative forms of CHEAP FOSSIL FUEL power generation.

Ed Miliband and the scum party think the British electorate are soft, to call it patronizing - doesn't get close.

Mar 13, 2015 at 10:33 AM | Unregistered CommenterAthelstan.

"It's bonkers, all the way down."

I thought it was turtles. Makes as much sense!

Mar 13, 2015 at 10:33 AM | Unregistered CommenterAlan Bates

Many (if not most) folk would argue that this stupidity is forced on us by the much greater Tory stupidity of privatisation of a naturally monopolistic industry in the first place. The entire farrago came from an ill-conceived academic hypothesis of Stephen Littlechild.

It isn't a question of whether a bureaucrat should fix prices in some way because every country already does that, including the UK now (by obscure means). The question is how to do it best and thanks to Littlechild's lack of foresight coupled with Tory free-market blinkers, we got the mechanism dead wrong.

For an alternative view of why regulation is better than not regulating, see here;
http://welkerswikinomics.com/blog/2013/03/04/monopoly-prices-to-regulate-or-not-to-regulate-that-is-the-question/

Mar 13, 2015 at 10:36 AM | Unregistered CommenterJamesG

I think you mis-read something.

This isn't just about prices. "A Labour government would give the energy regulator new powers to force firms to cut electricity and gas, Ed Miliband will say."

So expect more power cuts.

Mar 13, 2015 at 10:43 AM | Registered Commentersteve ta

Why does Nigel Farage allow Milipede to make these nonsensical statements without pointing out that green oncosts and taxes, both direct and indirect, amount to more than the profits of these companies and that Milliband et al were responsible for the increases from the outset, increases that can only escalate as more green elephants are built during the next parliament?
How will he persuade the generators to continue spinning backup at a loss whilst curtailing their prices through an inept quango?
After yesterday's deliberately misinterpreted mass attack on him from the MSM and petty pollies, why will he not ram the cost of green down their throats at every opportunity from now until the election?
This is an open goal that will resonate well in Liebour constituencies.

Mar 13, 2015 at 10:48 AM | Unregistered Commenterroger

JamesG, I agree with you about the disaster of energy privatisation, we now have layer upon layer of companies and landowners milking the public, and numpty politicians making futile gestures.

How can you get rich just by sending people bills? That is all that many of our so-called energy companies do.

Mar 13, 2015 at 10:58 AM | Unregistered CommenterMikky

I listened to Flint being interviewed on T4 TODAY. After explaining how the new regulator would work Justin Webb kind of stumped her with: "Why don't you just re-nationalise energy then?" Answer: gulp, stumble, cough cough, help.

Mar 13, 2015 at 11:00 AM | Registered CommenterHarry Passfield

JamesG: Was not the initial privatisation of energy supply as a result of EU diktat law - which our parliament had no option but to rubber-stamp?

Mar 13, 2015 at 11:04 AM | Registered CommenterHarry Passfield

JamesG - I think you have missed the point; there's a difference between having some price regulation on an industry and having retail prices determined by a politician. The former can be useful. The latter always ends badly; see Venezuela for an excellent example.

Mar 13, 2015 at 11:05 AM | Unregistered CommenterAlex

"Dastardly and Muttley"

After this week's PMQs, I'm thinking more of Bugs Bunny and Daffy Duck ("you're dethpicable").. :-)

Mar 13, 2015 at 11:06 AM | Registered Commenterjamesp

See also https://tallbloke.wordpress.com/2015/03/12/lords-st-reprimands-government-over-panic-on-blackouts-not-acceptable/
Castigation from the Lords no less.

Mar 13, 2015 at 11:09 AM | Unregistered Commenterroger

The spiralling energy costs are not the cost of fossil fuels, which are a small content of cost, but the expanding subsidies for the wind/solar projects spawned by Miliband's
(two kitchens) Climate Change Act.
They are stupid and hypocrits.

Mar 13, 2015 at 11:40 AM | Unregistered CommenterJohn Marshall

Peter Stroud
You should pass that on to your favourite party leader.

Regulation, Regulation, Regulation.

It could be a winner.

Mar 13, 2015 at 12:17 PM | Unregistered CommenterSandyS

@ Roger at 10:48

"Why does Nigel Farage allow Milipede to make these nonsensical statements......"

Was it Napoleon who said something along the lines of "Never interrupt your opponent when he's making a mistake"?

Mar 13, 2015 at 12:50 PM | Unregistered CommenterJoe Public

Mike Jackson, Labour's Minister for Drought in 1976 was Denis Howell. I expect that ALL politicians wish they could be so instantly successful. By doing nothing.

I do remember him being interviewed standing in a dried up reservoir, during heavy rain. We then had a very wet autumn, (was he made Minister of Floods?) which filled all the reservoirs, that experts said, would take years.

It was a political triumph, that Labour need to be reminded about. Nobody mentioned man's influence on the weather then, but the Prime Minister JIM Callaghan, Fixed It.

Fortunately, in 1976, nobody knew, what we now know, we don't know, now.

Mar 13, 2015 at 12:50 PM | Unregistered CommenterGolf Charlie

JamesG on Mar 13, 2015 at 10:36 AM
"Many (if not most) folk would argue that this stupidity is forced on us by the much greater Tory stupidity of privatisation of a naturally monopolistic industry in the first place."

Mikky on Mar 13, 2015 at 10:58 AM
"JamesG, I agree with you about the disaster of energy privatisation"

I could infer from your comments that, in the 1960s and 70s, the Nationalised Industries, the Electricity industry in particular, were exemplary in their operation, but I don't, because I lived through it, and have heard tales of just how badly run they were: think the NHS IT project, with £12 BILLION WASTED!

This lengthy article expresses the 'Electricity Privatisation was Bad' agenda by James Meek:
http://www.lrb.co.uk/v34/n17/james-meek/how-we-happened-to-sell-off-our-electricity

... but what is interesting is the responses that it generated (with my emphasis):
"Perhaps Meek should remind himself of the studies published by the Select Committee on Nationalised Industries in the 1960s and 1970s. The committee thrashed around desperately in report after report for ways of reforming the nationalised industries, but never succeeded. Political interference, Treasury constraints and powerful trade unions, combined with the interests of the industries themselves, thwarted any realistic reform.

Privatisation provided a way out of those dilemmas, and still would, provided there were effective regulation and only a minimum of political control of matters such as cross-border ownership. In the 1990s I tried vainly to persuade Labour Party representatives to stop wasting their time opposing privatisation in principle instead of concentrating on the details of regulation."
http://www.lrb.co.uk/v34/n18/letters#letter3

Remember that the Electricity Act was passed in 1989 and The Central Electricity Generating Board (Dissolution) Order was in 2001:
http://en.wikipedia.org/wiki/Timeline_of_the_UK_electricity_supply_industry

And:
"I was at a couple of meetings in 1996 that brought together the rump of the state-owned enterprises that had survived the Thatcher and Major privatisations. They included the bodies running the Tube, the canals, Manchester Airport, the Scottish water supply, the Post Office and air traffic control. Apart from still being in public ownership, they had in common the need to raise money for capital investment.They were well aware of the rules in the rest of Europe that enabled (and still enable) a firm like EDF to behave like a private company but to enjoy the advantages of low borrowing costs backed by government. The case was made to the Labour opposition for the same rules to be adopted here. John Battle, then Labour’s shadow minister for energy, was one of those briefed, as was the shadow Treasury minister, Alistair Darling.

Nothing came of it."
http://www.lrb.co.uk/v34/n22/letters#letter12

While the British Energy Industry has a large domestic customer base, it is open to the vagaries of the International Energy Markets, so not only do political bombshells, like 'foreign' wars, uncooperative powers and 'boom and bust' economic cycles, appear 'out of nowhere', new technical advances make old traditions uncompetitive.

The State, when it relies on free enterprise for most of its wealth creation, cannot cope with these changing times as well as the Free Market, but one country's semi-State Industries can take advantage of another country's industry when that country's government does everything to hinder its own industries.

EDF might have taken advantage of the British Government's dereliction of duty, but France is seeing its wealth creators fleeing to Britain! So no one is a winner.

In Venezuela, the State has used its oil wealth for political gains and greatly hindered the wealth creating sector, but now, with the oil price drop, it is a basket case! The Army has commandeered a toilet roll factory to ensure the national supply! The Oil Industry there is suffering because it has become dysfunctional.

Our Government passes Laws, the Police catch the alleged law breakers, while the Courts ensure Justice. If the Government, Police, or even Social Services or the BBC decided who was guilty, what a rum place this country would be!

The same is true of Business, Industry and Finance. Muddling roles causes chaos.

Mar 13, 2015 at 12:54 PM | Registered CommenterRobert Christopher

'....a legal duty to ensure fair prices....'

Define 'fair', Mr Milliband. No - come on - you've said it - so define 'fair'.

Separately - oh, how well I remember the drought of 1976 - and the wonderful Unintended Consequences. When standpipes came in, the water companies went round painting the stopcock covers of those exempt (single pensioners) a nice hard gloss red.
Cue antiques sharks touring the neighbourhood, looking for red-painted stopcock covers.
'Allo, luv - got any antiques you want to sell..? Mind if I have a look..? 'Ere - I'll give you a couple of quid for that old dresser...'
And the flipside - no exemption if there were TWO pensioners in a property. Cue an eighty-year-old lady leading her BLIND, eightyfour-year-old husband to the standpipe with his bucket....
Oh, yes - Labour can do wonderful policy on the hoof...

Mar 13, 2015 at 1:19 PM | Unregistered Commentersherlock1

Harry Passfield on Mar 13, 2015 at 11:04 AM
"Was not the initial privatisation of energy supply as a result of EU law - which our parliament had no option but to rubber-stamp?"

I remember it as something like that but, it looks as though the Electricity Act, passed in 1989, preceded the main EU legislation on EU Electricity Industry legislation. I found this, which doesn't display meaningful definitive dates, but it looks like the 1990s:
http://aei.pitt.edu/4962/1/4962.pdf

Privatisation was a means to solve the insolvable problem of State Industries not responding to market forces, such as avoiding any opportunity to change for the better (see my last post) and that it anticipated the growing influence of the EU, and its diktats. At the time, pre-1991, we thought that we could influence Brussels and develop a more open organisation.

Mar 13, 2015 at 1:21 PM | Registered CommenterRobert Christopher

I know there is a typo in the following, but Ed's plan would be expected to cut [supply of] gas and electricity.

A Labour government would give the energy regulator new powers to force firms to cut electricity and gas, Ed Miliband will say.

Cap the price and supply will respond. I thought even Socialists had learned that economics lesson by now.

Mar 13, 2015 at 2:02 PM | Unregistered CommenterGeckko

Here in the US, most power companies are private, with some oversight. In general, the regulations force the regulators to allow a profit any time they impose a mandate (such as serving rural customers). The government does not decide when to build a power plant, though they do have to give a permit.

"It's stupidity piled on foolishness piled on insanity. It's bonkers, all the way down." I'll have to remember that one.

Mar 13, 2015 at 2:10 PM | Unregistered CommenterCraig Loehle

sherlock1 "Fair Prices". I do not know Miliband's precise definition, but under his disastrous Climate Change Act, I think "fair" may be interpreted as making the cost of energy able to support as many people as possible, in pointless Green jobs.

One of the surprise beneficiaries of this scheme, would now appear to be Dale Vince's ex wife. How nice of him to share tax payer subsidies so readily and enthusiastically. Shame tax payers did not get a choice in any of the decision making.

Mar 13, 2015 at 2:48 PM | Unregistered CommenterGolf Charlie

Privatisation in the UK was a way to break the trade unions, but now that they are broken I think the state should own and operate (but of course not build) power stations and transmission infrastructure, guarded by the army against terrorists, both overseas and home grown ones. Trade unions would have to be banned of course, and rules put in place to prevent political interference. There would be no problem raising money for investment, as the income stream is guaranteed to grow and prices could be raised at will, politicians would be kept out of it completely.

Mar 13, 2015 at 3:01 PM | Unregistered CommenterMikky

“legal duty to ensure fair prices this winter”.

Seriously, in legally enforceable terms wtf does this actually translate into? Let's be absolutely clear here, I passionately believe this to be meaningless, electioneering jargon.

Mar 13, 2015 at 3:28 PM | Unregistered Commentercheshirered

cheshirered, you must forgive him, as he expects the public, to forget his proudest achievement, the Climate Change Act.

The climate has not changed since, despite the best efforts of tax payer funded scientivists, to tell us otherwise.

The DECC, the Department of Economic Chaos and Calamity, are praying for a Miliband win, as though their jobs depend on it. To hell with anybody else's jobs.

Mar 13, 2015 at 4:23 PM | Unregistered CommenterGolf Charlie

Golf Charlie:

Likewise DEFRA, the Department for the Elimination of Farming and Rural Activities.

Mar 13, 2015 at 5:09 PM | Registered CommenterPhillip Bratby

"It's stupidity piled on foolishness piled on insanity. It's bonkers, all the way down"

This is what always attracts the Labour vote

Mar 13, 2015 at 5:15 PM | Unregistered CommenterBLACK PEARL

BLACK PEARL, I think Natalie Bennet is intending to run with that as a Manifesto pledge. I had not previously noted her sense of humour. But I expect she hopes to be the best whingeing Pom of all time.

Mar 13, 2015 at 6:04 PM | Unregistered CommenterGolf Charlie

Phillip Bratby, the Green Belt was a great achievement of the 1947 Labour Government.

Miliband would like to build on it.

Mar 13, 2015 at 6:11 PM | Unregistered CommenterGolf Charlie

In the 1960s, we had Harold Wilson, full employment,The Who, mini coopers and mini skirts. What more could anyone want ?

Mar 13, 2015 at 7:10 PM | Unregistered Commenteresmiff

Yanks destroyed it.

Mar 13, 2015 at 7:11 PM | Unregistered Commenteresmiff

"CARACAS — Jose Hernandez is fighting mad.

Standing at the tail end of a long lineup to buy a few kilograms of sugar, the 66-year-old pensioner shouted Venezuelans had once been slaves to Spain but were now slaves to the Venezuelans who governed them.

“Our rulers have been mugging us,” he said. “They hide food and medicine from us. Armed groups won’t let us be in the streets after 6 p.m. It is horrifying what we live through in this country.”

Mr. Hernandez was giving voice to what millions of Venezuelans think as they wait for hours to buy meagre amounts of staples such as toilet paper, corn flour and cooking oil. Runaway inflation has driven the price of other products beyond the means of many."

Welcome to the Third World

Mar 13, 2015 at 7:58 PM | Unregistered Commentertmitsss

Breadline Britain: 20MILLION now living in poverty as landmark study reveals how tax system creates inequality


7 February 2015

The largest ever survey of poverty in the UK claims that one in three Britons is now below an internationally accepted minimum living standard

http://www.mirror.co.uk/news/uk-news/breadline-britain-20million-now-living-5123323


Welcome to the Fourth World

Mar 13, 2015 at 8:03 PM | Unregistered Commenteresmiff

esmiff, whose voice mail did the Mirror hack to get that exclusive in the run up to an election?

Mar 13, 2015 at 8:36 PM | Unregistered CommenterGolf Charlie

Here's a similar story from the ideologically sound Nuremberg Beano.

One in four British children are living in poverty... worse than Poland and Portugal, reveals damning Unicef report

http://www.dailymail.co.uk/news/article-2811055/One-four-British-children-living-poverty-six-years-Great-Recession-reveals-damning-Unicef-report.html

Mar 13, 2015 at 8:42 PM | Unregistered Commenteresmiff

Of course we already have most prices in the system set by politicians - look at all those CFD numbers in Ed Davey's Expensive Energy Bill, dropping on your doormat quarterly. Indeed, it was Miliband who was responsible for the present system of retail pricing, encouraging OFGEM to use a long forward commodity hedge of 18 months in its "Supply Market Indicator" that benchmarks industry pricing and profitability. The cost of the price insurance is just yet another reason why our prices are needlessly expensive (the banks are the main providers of the insurance, and their commodity desks have mostly been highly profitable on the back of it).

If Miliband wants companies to abandon forward hedging (except where customers specifically ask for price caps, fixes or collars that allow for the extra derivatives cost of the hedges), he should say so, simply and plainly - while pointing out that prices will then fluctuate much as petrol and diesel prices do. If he is complaining that rigged markets dominated by an oligopoly set up by Labour (the mergers to create the Big 6 happened in 2002 in response to the Utilities Act 2001) produce prices that now look rather high then he can only blame the politicians responsible - including himself, who is the author of most of the original policy to make energy expensive as well as requiring OFGEM not to point that out (as his 2010 Energy Act parting shot lays out).

Mar 13, 2015 at 10:05 PM | Unregistered CommenterIt doesn't add up...

In the 1960s, we had Harold Wilson, full employment,The Who, mini coopers and mini skirts. What more could anyone want ?

Refrigerators? Internal toilets? Neither were anything like universal in 1965.

I personally would go for people with a memory not clouded by nostalgia.

The miniskirt was a 1960s sensation. They couldn't be now, because how would anyone distinguish them from what girls normally wear these days? In was precisely the frumpiness of the average 1960s clothes that made them different.

(BTW The Who started in 1964, sure, but were supporting acts in that decade. Only right at the end did they start to break through to anything like mainstream. They were a 1970s band.)

Mar 14, 2015 at 12:54 AM | Unregistered CommenterMooloo

If Millipede is promising the pipe dream of controlling energy prices which is a bit rich as he's the one who was instrumental in implementing the CCA in 2008 he's telling porkies..

"On a wider democratic front some of Labour’s most cherished and popular policies are unlikely to survive scrutiny by European Court of Justice. We can forget ambitious plans to renationalise the railways and Royal Mail or place a cap on energy prices."


http://getbritainout.org/graham-stringer-mp-eu-makes-mockery-workers-rights/

Mar 14, 2015 at 9:08 AM | Unregistered Commenterc777

Hugo Chavez milk price controls ensured that supermarkets shelves were filled with cheap no milk

Mar 14, 2015 at 9:22 AM | Registered Commenterstewgreen

In the 1960s, we had Harold Wilson, full employment,The Who, mini coopers and mini skirts. What more could anyone want ?

And I'm sure that Mars bars were bigger too!

Mar 14, 2015 at 10:04 AM | Unregistered Commentersteveta_uk

Mooloo

There no jumbo jets in the medieval warm period either.

The point I was making was full employment. Even if there was less technology. I want to live in Britain, not Yankland as we are increasingly becoming.

Mar 14, 2015 at 10:27 AM | Unregistered Commenteresmiff

The 2015 Liebour pledge card is out today and surprisingly carries no reference to Climate Change, the 2008 Act, nor any of the associated Hydra headed nonsense.
As Miliband personally delivered this minimal opus this am, can we take it that he no longer subscribes to the outdated crap that he and other useless parliamentarians foisted upon us?

Mar 14, 2015 at 12:34 PM | Unregistered Commenterroger

Who is not in favour of fairness? If a future Labour government would appoint a bureaucrat to set a fair price for energy, why not also make similar appointments so that we could have fair prices for food, water and other essentials? This could become a very popular idea and therefore it needs a name. I suggest "Communism."

If Labour get elected and if they decide to extend the idea to food then they would have to consider whether or not junk food should be included. An "unfair" price for junk food would be better but might alienate part of Labour's core vote.

Mar 16, 2015 at 11:04 AM | Unregistered CommenterRoy

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