Published:

46 comments

Let’s hope today’s PMQs is an improvement on last week’s effort. Because what happened a week ago was a low point for the Prime Minister.

This was John Rentoul’s take in the Independent:

“I didn’t pay attention at Sunday school, but I learned this lesson later: whoever resorts to abuse loses the argument. Still, better late than never. It was helpful in analysing David Cameron’s worst quarter of an hour in the House of Commons [last] Wednesday, when he was told off by the Speaker for calling Ed Miliband a ‘con man’.

“You know someone has lost it when they go for the person rather than the argument. For all that people think that Prime Minister’s Questions is an undignified shouting match, it operates under rules, and when those rules are broken it is an indicator that something is up. What was up on Wednesday was Cameron’s time as undisputed master of the Chamber.” 

This exaggerating somewhat: Cameron has had bad weeks in the past and he’ll have good weeks in the future – but not on energy policy, where he’s completely blown his credibility:

“It is unclear whether Cameron intended to say he would ‘roll back’ green taxes on energy, which made it sound as if he wanted to abolish them…”

Whether he meant to use those precise words is immaterial. David Cameron and George Osborne have spent several weeks creating the impression that rolling back the green taxes on our energy bills is precisely what they intend to do.

But here’s the thing: They have no means of doing so. Indeed, it’s debatable whether the Government can even stop them rolling forward.

For an average annual energy bill of £1,255, just under 10 per cent is accounted for by green taxes (or, more accurately, green levies). Of this £112, over half – or £61 – is for energy saving schemes, the Warm Homes Discount and the installation of smart meters. These are activities designed to improve the efficiency of our energy use and/or to reduce bills for the most vulnerable households. Abolishing these levies would mean immediately higher bills for those who can least afford them and, in the longer term, a less efficient – and therefore more expensive – energy system for the rest of us.

Of the remaining £51, £8 is the result of the European Union Emission Trading System (EU ETS), which Britain can only quit by leaving the EU – which, however desirable, is not something the Government is planning to do. A further £5 is due to a policy mechanism called the Carbon Price Floor (CPF), which ‘tops up’ the price of EU ETS carbon permits (and which was introduced as a hidden subsidy for nuclear power). The CPF only kicks-in when the EU ETS price of carbon falls below a certain level. Economic recovery in Europe will almost certainly push the carbon price back up again, meaning that the CPF will cease to be a factor.

That leaves £37 in the form of subsidies for large and small-scale renewables. This is the ongoing annual cost of legally-binding contractual agreements that have already been entered into. They cannot be cancelled. The Government could, of course, stop entering into new subsidy agreements, but then it would have to find a different way of complying with the Renewable Energy Directive to Britain is subject – bringing us back to the issue of EU membership.

The only real option that the Government has at its disposal is to fund some or all of the above costs out of general expenditure. But does David Cameron really think he can ‘roll back’ these so-called green taxes by transferring them from the consumer to the, um, taxpayer?

John Rentoul admits that the Prime Minister did make one good point last week:

“[Cameron] genuinely thinks that Miliband’s policy of freezing prices while ‘resetting the market’ is populist gimmickry on jargon-filled stilts. He is right: the idea that, if you switch the market off and then switch it on again, energy will miraculously become cheaper, is silly, as Ed Balls, Peter Mandelson and Dieter Helm, the professor who used to advise Miliband in government, all know.”

To be fair to both party leaders, energy policy is a nightmare – riven with technicalities, externalities and endless complexities. But instead of trying to get to grips with the problem, they’ve just given up – turning instead to crowd-pleasing promises that they can’t possibly deliver.

On this most serious of issues, public policy has become a contest for con men.

46 comments for: British energy policy – a contest for con men

Leave a Reply

You must be logged in to post a comment.