On August 8th 2011 I wrote on this site that energy prices were the biggest political issue needing attention. Many now seem to agree with me.  The cost of EU and UK energy policy is increasing, just as some of us feared. In the last two weeks has come the shock announcements of major hikes by two of the big six energy companies, meaning even bigger bills ahead. The high cost of renewable energy, carbon taxes, emissions based closures,  and the costs of closing and replacing older oil, coal, and nuclear plant is catching up with us.

    When I checked my bill I  noticed it had  gone up not just because gas and electricity are dearer, but also because I have used more gas for heating over the last year. I well remember that as late as May I was getting up when the outside temperature was just a few degrees above freezing.  On  more occasions  the central heating triggered because it was so cold. It also started to deliver cold evenings before August was out.

It is one of those ironies as we tackle global warming  that in recent years in the UK we have had some colder  and longer winters. Whilst we did at last get some hot days this summer, it felt  autumnal in the early morning and in the evening before  August was  out. Before adjustment, the heating started  to trigger early again.

      Many, especially the frail and elderly, will not be able to cut the increase in  their bills by using less, as they are already on prudent  settings and need to keep warm. Indeed, if we have a very  cold long winter they may have to use more, not less. The government should be generous to the ill and  the elderly who have to incur higher bills, through its pensions and disability benefit increases, cold weather payments and the like.

I will continue to press for cheaper energy. Household bills are too high primarily because the fuel cost is too high. The industrial revival the government seeks will need much more cheaper energy to power it. The EU experiment with very expensive renewable power from unreliable sources like wind will not power our factories or keep us warm on a regular basis. To do that we will need those standby power stations burning gas.

An energy price freeze which does not include protection against wholesale energy price rises cannot help. Nor does it help if you need to burn more to keep warm.  The underlying reality is that Mr Miliband, Labour and the EU signed us up to much dearer energy than the US or Asia enjoys. There may be arguments at the margin over how much of the great extra cost is paid for by customers, and how much by taxpayers in subsidies. As they are largely the same people it does not make a lot of difference. What matters is when and how we are going to cut loose from the very dear  energy strategy we are locked into.

I am told the government is working on ensuring the older standby coal and oil stations to generate electricity are available should need arise. Next year they intend to secure back up supplies for days when not enough wind blows. It just serves to remind us of the extra costs the renewables policy is imposing, as both these methods of ensuring security of supply cost extra. The government has started to cut the allowable costs of renewables and needs to do more in that direction. The way to cheaper energy is through an energy mix that is more based on lower  price and efficiency.

  This crisis has been building for more than a decade.Previous posts include:

August 8 2011 Energy prices

May 18 2012  Cheap energy can be energising

July 29 2012  Green energy makes some people see red

August 28 2012   Germany switches to coal

December 5 2012   Drill Davey, drill

March 27 2013    Letter to the Energy Minister

April 27 2013   The UK needs cheaper energy for an industrial revival

June 29  2013  Keep the lights on Mr Davey

 

          The Attorney General himself went to argue his case in the Supreme Court against claims from prisoners that they were owed compensation as they had a right to vote in elections. This issue has become the cause of friction between the UK Parliament and the European Court of Human Rights. These latest two cases saw prisoners seek to bring cases under EU law, which post Lisbon is increasingly moving into  human rights matters.

          As someone who thinks we keep too many people in prison, and thinks we need to do more to train and educate prisoners so they can lead a more worthwhile and law abiding life on exit, I have not been leading the campaign to prevent prisoners voting. I do, however, think it is a very good example of exactly the kind of issue a sovereign country chould  decide for itself through Parliament. I am against any moves by any European Court to change Parliament’s policy.

       The victory of the Attorney General in yesterday’s judgement is therefore welcome. So too is the definitive statement in the judgement about Parliament’ s supremacy in this matter:

“the legislation (UK election law) is entirely clear and it would flatly contradict the evident intention of the UK (if it  required some prisoners to vote). It would also be impossible for the Supreme Court itself to devise an alternative scheme of voting eligibility that would or might pass muster in a domestic or supra-national European court…Such matters would be beyond its jurisdiction….That being so the creation of any new scheme must be a matter for the UK Parliament”

          However, the long and complex judgement serves to remind anyone who reads it just how much encroachment on our affairs there is from ECJ as well ECHR law. The Judges did not agree with the Attorney General that they should disregard previous ECHR judgements in favour of prisoner voting. Instead they dismissed both prisoner appeals under European law, primarily on the grounds that European (EU ) law “does not incorporate any right to vote paralleling that recognised by the ECHR in its case law…”

          Ministers are finding out the hard way that in so many areas of life they have to fight in court to defend what we have been doing for years, or face a court case where they wish to change policy and honour promises they have made to the public.  To all those who are scornful of Conservative Ministers, I would point out that they are often seeking to limit the EU’s power and to enlarge our opportunity to make our own domestic democratic decisions. Yesterday was a good top line result, but the detail reveals just how much power this country has surrendered.

 

I was able to do some more spot checks on the capacity issue on railways to Manchester when going to conference.

I caught a later train than I usually do to go to Manchester. The 7.20 you might have thought would be one of the busiest, getting you into Manchester in good  time for a 10 o clock meeting.  When we left Euston over half the seats in the Standard class carriage and  70% of the seats in the 1st class carriage where I counted   were empty. The proportion empty rose  at Milton Keynes, the first stop on the route, and stayed that way for the rest of the journey. That was despite the Conservative conference which must have  created some extra demand.

The other carriages on the train seemed similarly populated to the ones where I counted. Coming home on the 9.15pm  most seats in Standard were empty, with around 90% of the first class seats empty  in a carriage where I counted.     Tickets were checked both  before getting onto the platform on the way to Manchester, and again on the train  just as we pulled out of Euston. Tickets were not checked on  the way back.

When I try and get on a commuter train at Reading or Wokingham during the morning peak we have a real capacity problem. I went to a reception with the  train operating companies at conference, and talked to them about the priorities I draw from these experiences. We need to boost capacity on popular routes at popular times. The main capacity problems seem to be on commuter routes into major cities.  Once again I did not experience any capacity problem on trains out of Euston,  or back to Euston.

It will be interesting to see if Labour’s reshuffle heralds a change of their view on HS2. The new Shadow Transport Secretary is not such a keen advocate, and I hear the Shadow Treasury team do think they would like to get  their hands on the £50bn in the books for HS2. The fact that it will all be borrowed would not put them off proposing spending it in some different way if they do decide as a matter of Shadow policy to ditch the grand project a Labour government started.

 

 

All the time the UK remains in the EU, or remains in on current terms, our borders policy is mutually dependent on border controls elsewhere in the EU. In some senses Italy’s borders are our borders too. We need to know how to influence this policy, all the time the issue of the excessive powers the EU enjoys in the UK remains unresolved and we remain committed to Labour’s EU borders.

The recent tragic loss of life in the seas to the south of Italy have  brought a response from the Italian authorities. They are  now using more of their military force to patrol and to offer help to any vessel in difficulties. We should all respond to distress by wishing to help.

The question, however, remains how should the EU respond to the underlying  crisis?  In an ideal world people seeking entry into the EU would do so through regular legal channels. Italy would make decisions based on the facts of each case.  People seeking asylum would find a home. There are  restrictions on economic migrant numbers and qualifying requirements.  The arrival of a large number of illegals greatly complicates the situation. If Italy grants them all admission she has overturned the rules and the legal system and has effectively moved to open borders with the rest of the world. If she tries to send them all back to where they came from there will be difficulties over asylum rights and human decency.

Somehow Italy has to assert her legal controls. She needs to reward those who apply legally and meet the requirements.  She needs to set realistic rules that balance the wishes of those wanting to come with the needs and views of  Italian taxpayers and voters. Whilst offering humanitarian assistance to those whose lives are threatened, she needs to avoid sending a perverse incentive for more to risk their lives by taking to the seas in overcrowded and dangerous boats. We all have an interest in Italy finding the right balance between admissions and refusals, and getting across the message that a dangerous sea voyage with unreliable organisers and boats is not a free passage to the EU but a worry for all concerned and a bad risk for those embarking on it. 

 

 

 Both the BBC and Channel 4 have been telling us that the Tea party elected Republican Congressmen and women are behaving unreasonably  for daring to say that the Administration should reduce its spending and borrow less. The Republicans  are being lined up for the blame if there is a failure to agree a new debt ceiling and budget settlement.

    Apparently to much of the fashionable media in the UK normal now  is printing and borrowing on huge scale so the state can spend well beyond its tax revenues. They give airtime to the notion that if the Republicans insist on the Administration spending less to live closer to its means, there will  be a default on US debt and then a world financial meltdown. People in the media are lining up to take the President’s view that if this happens we should all blame the Republicans. They think the President has a duty to the USA and the world to spend more, print more and borrow more.

          Does it  never occur to these opinion pushers that the President has plenty of money coming in from  taxes to be able to pay the interest on the debt. It would be his choice to renege on the debt if the Republicans dug in and declined to raise the borrowing ceiling. The President could postpone or cancel other types of spending where he has more discretion if he has to live with less borrowing. I doubt Mr Obama is unpleasant enough or foolish enough to renege on the debt and trigger a financial collapse. It would hurt the people he is meant to be looking after if he did.

           It looks as if the President’s super spin will succeed in getting the Republicans to agree to increased borrowing. US voters blame both the Republicans and the Democrats for the impasse over their future budget, but here in the UK the media largely blame the Republicans.

            One of the ironies of the situation is that the US is doing more to rein in its borrowing by spending reductions than the UK is, but much of the UK media does not read the figures and just assume Mr Obama must be spending and borrowing more than a Conservative led Coalition, relative to the size of country. The other irony is that many of these same commentators like the EU and the Euro, so they are reluctant to come out and attack the austerity policies that characterise the weaker countries of the  Euro area, where spending and wage cuts have been draconian compared to anything in the USA or UK.  Republican or Conservative “austerity” policies are unacceptable, but much tougher Euro austerity policies are just fine.

  I see Mr Clegg has just come out with his case  to stay in the EU.  One of his four reasons  is so you can drive to Calais to buy cheap champagne. It shows just how out of touch he is if he thinks most people have champagne on their shopping list, and have the money to pop over to Calais anytime they have run out. Clearly the air in the Cabinet Office is very rarified.

         The deal he cites looks dear to me if you take into account the travel costs.   It’s also not a very green way of doing the up market shopping.  He at least has the decency to remind us his party “is unambiguously the party of In” and he thinks most Conservatives want out .  Most people do not have the price of champagne on their mind at the moment and would not put it in their top four concerns over the EU.  Unaffordable energy bills and EU migration would be nearer the top of most people’s list. Hasn’t he understood the Parliamentary rows about energy costs? Is he determined to block all efforts to have more affordable energy, as he powers on with his moral leadership of the anti Carbon dioxide brigade?  Indeed, one of his four main reasons to be in the EU is to guarantee dear energy.

 

             He repeats  the old lie we have often debunked that 3million jobs depends on it!  Does he seriously think France and Germany would want to stop trading with us, given all the jobs in their countries that depend on it? He says that because criminals cross borders we need pooled justice. Has he ever heard of extradition warrants? Can’t criminals cross the border into Switzerland or Norway as well as into France?  He says that “Many problems like climate change can only be tackled if we work together” – Why doesn’t he try working on that with the US and China, the world’s two largest emitters? And his fourth main reason is so he can buy cheap champagne at Euro 12 in Calais!  I looked up champagne at local  supermarkets in England and found some for £12.49 – that I think works out considerably cheaper than travelling to Calais to buy it at 12 Euros, the price Mr Clegg recommends!

    As Mr Leeuwen has rightly reminded us, like it or not, we are in the EU. As members we form part of the electorate for the European Parliament. Our UK Ministers participate in the Council of Ministers meetings. The Council of Ministers and the Parliament between them make the decisions on new laws and are meant to guide and watch over the official government, the unelected Commission.

          The pro European minority in the UK who regularly say they need to make the case for our membership usually just threaten us with the view that if we left we would lose our trade with the EU. They see the main point of our membership as  being to buy and sell things with the rest of the EU. Most people who have  not so far regarded the EU as the main issue to settle when they vote seem to take this view. They find many of the laws and decisions of the EU they know about  as annoying or silly. They have little idea of just how much power and influence the EU now has. They go along with it because they want to keep the trade and fear a loss of jobs if we left. The usual phrase older  people use is “I voted to belong to a common market. That’s what I want”. Younger people rub along with the EU, as they have been told it is important for jobs and prosperity.

       If you ask people what they want the EU to do, by a large majority they will say “Less”. They want it to spend less of our money, take less of our tax revenue. They want it to pass fewer laws. Indeed they now want it to repeal many laws it has needlessly or vexatiously passed so far.  They want a trade arrangement, but they do not want the overarching government Mr Leeuwen points out we now suffer under.

         The minority of pro Europeans do not dare advance the case for a European government. They usually deny such exists. If they ever venture beyond the trade argument, it would be to praise the EU for pursuing a green agenda which is rapidly becoming toxic politics as people work out that just means uncompetitively expensive energy for our homes and factories.

          Occasionally they try to tell us the EU offers us peace!  That is the ultimate absurdity, looking at the last 60 years when the USA has kept the peace in Europe through NATO, standing up to the communist tyranny and ultimately forcing it to accept it had lost the arms race and the economic race without a shot being fired. I do not recall the EU helping us win the battle of ideas against militant and militaristic Marxism from the USSR. Once again that was left to the Eurosceptics and the Americans, groups the pro Europeans seem to despise.

           All the time we remain in the EU I want it to cut its spending, reduce  its laws and its interference in our daily lives. I want it to have a big repeal of many of the laws we either do not need or can make for ourselves. I want it to stop spending money on just about everything. It is better to spend our own tax money as we see fit. I do not want a European criminal justice system, a European army, a European foreign policy or a European migration policy. That Mr Leeuwen is why many of the UK voters are irreconcilable to the current EU. That is why we do not regard it as our government. It does the opposite of what we want, and seeks to wind us up at every available opportunity. We feel locked into a mechanism we did not seek, did not approve and which never does things for us.

 

          I believe in  freedom of the press. If the press  needs regulation on top of the criminal law which already applies to newspapers and journalists it should be self regulation, not regulation under any kind of political control.  In order to have a system of self regulation, the  press needs to buy into it and operate it. Politicians should not force a system onto the press that they are unwilling to operate.

          If there are bad practices which the country wishes to prevent, Parliament can legislate to make them illegal. The worst abuses by some in the press in recent  years were against the law. Phone hacking is against the law. There is no need to set up expensive and controversial regulation to tackle people wh0 break the law. They should be charged in a court of law.

           Other occupations which have fallen under politician inspired “independent regulation” are often the worse for it. After years of extensive increase in financial regulation, switching it from self regulation to Statute based regulation, we had the worst banking crash and set of scandals in living memory. That was no great advert for Statute backed regulation.

 

              I want cheap energy. I have tried various proposals to bring this about, all to little avail so far.

              The Chancellor and Prime Minister now want cheaper energy. It is good to have powerful allies. So why can’t they just fix it?

              The reason is simple. All the time we are in the EU and bound by its laws, there is strong pressure for dear energy. We are under several legal requirements which necessitate dear energy.

               The UK has been forced to close a number of coal and oil fuelled power stations which provided relatively cheap electricity, to comply with an EU emissions directive. I have urged the government to seek a temporary exemption whilst we sort out new ways of generating affordable power, but Mr Davey the Energy Secretary has not done so. There is no guarantee we would get such a derogation, but surely it would be worth a try? If we could demonstrate without these older stations we might run out of power we could  just ignore the Directive on grounds of security of supply and overriding national interest if they refused to see sense.

               The UK signed up under Labour to an extremely expensive renewables obligation. The UK is having to expand its output of renewable power massively. This is expensive power to provide. The more we rely on it, the higher our bills go. Much of it is interruptible, so we also have the extra cost of back up power sources for when the wind does not blow or the sun is not strong enough.

               The UK also signed up to carbon reducing requirements which reinforce the move to dearer energy.

               Labour signed up to these laws under Mr Miliband as Energy Secretary. He told us at the time that it would mean dearer energy, but he thought that a price worth paying to have a pioneering carbon reduction policy. Now he says he wants energy prices frozen, regardless of the rising costs of renewable energy as the proportion of it increases, and regardless of the costs of gas or oil on the market. Under pressure has had to agree his freeze policy could not work if world energy prices took off during the freeze.

           Nor can they work on the figures. The typical profit margin of a large energy company in the UK is 4%. If all companies worked for no profit at all – not something that of course can work – they would still need price rises now to hit breakeven, given what’s happened to costs.  Mr Miliband is trying to offer people something for nothing. He is seeking  to spend far more than the current profits of the energy companies. He needs to grasp that if investors think the relatively low margins of the majors are going to be slashed, there is not much point in investing in UK energy. Who will then build or the new and replacement capacity we need?

              So what should we do? The UK government should go to Brussels and explain we need to have a dash for gas and other cheaper energy. The UK will do this regardless. We would be happy to contribute to a revision of EU law to make it legal and to help other EU countries also damaged by dear energy.  If not, the UK will simply have to take action on its own. It would be part of our renegotiation.  Our country needs cheaper energy. It is an overriding national interest. I see from the remarks of the Industry Commissioner in Brussels there are some in our EU government who understand just how much damage the EU’s energy policy is now doing. It is pushing much industry and business out of the EU to places where energy is cheaper.

 

The Economist has supplied a graph which shows how far and fast house prices have risen in a range of countries.

Taking 1980 as the base with an Index of 100  (so there is available data for all  these countries) produces the following list of price rises: (approx Index level in each case judged from the graph)

South Africa   3590

Hong Kong     1450

New Zealand    1370

Spain  1180

Australia    1050

Singapore   1020

Italy 770

Uk 740

Ireland 580

US 360

Countries like Germany and Switzerland in the EU have seen smaller rises. In the EU  Ireland and Spain have shown the greatest overall rises in the boom. Both have experienced sharp falls  in recent years. Both have fallen victim to the destructive boom/bust cycle the Euro has imposed on them. Spain peaked at nearly 1700 before falling by 30%. Ireland peaked at 1151 before halving to 570. The UK was wise to stay out of this problem.

Outside the EU several Asian success story economies have experienced rapid house price rises. Hong Kong and Singapore have been particularly strong.  So too have Australia and New Zealand.

Judging by these international comparisons the UK experience has been in the middle of the pack. UK house prices experienced falls in 1990-92 when the UK was locked into the boom/bust cycle caused by membership of the Exchange Rate Mechanism and exit from it. The UK also experienced sharp falls in 2008-9 when again it experienced a violent boom/bust cycle thanks to misjudged fiscal and monetary policies.

There is no evidence from international comparisons that the UK is currently in an unsustainable house price boom, nor from the domestic market in most locations. It is true that in  central London in expensive areas there is substantial buying from abroad, usually for cash, which has been bidding up  prices strongly for some years. The competitive jurisdictions like Hong Kong and  Singapore have experienced something similar. To judge whether Central London is expensive for foreign buyers you need to compare high London prices with high prices in Hong Kong, New York, Sydney etc.

The government has this week published its details of the Housing deposit guarantee scheme. All those who have written in to condemn subsidies to the house buying market will be pleased to know that the scheme charges the lending institution a fee for the guarantee priced to avoid any state subsidy – which would be illegal under EU state aid rules anyway. This fee can and will be adjusted in future in the light of the actual bad debt rate experienced. I would not support a housing subsidy scheme where taxpayers were paying part of the bill for someone buying a property at up to £600,000.

 

 

         Inland Revenue figures confirm what this site has been saying for some years. To collect  tax from  the rich you need to set a competitive tax rate. That helps you offer  Income tax cuts to everyone else.

         In the last year of Labour when the rate of Income tax for the rich was 40% the top 1% of earners earned 13.9% of all the income in the country. They paid 26.5% of the total Income Tax.

        The advent of the 50% tax rate led to a predictable decline in the numbers of rich staying and paying, and to lower incomes. Their share of total income fell to under 12%. Self assessment tax receipts fell.  With the reduction of the top tax rate  to 45% the top 1% have got back up to near their 2009-10 position, earning 13.7% of total income and now contributing a record 29.8% of the total income  tax. (HMRC estimated  figures for 2013-14) Both the amount paid and the proportion of total tax  would doubtless be higher if the top rate was back to Labour’s 40% rate.