October 25, 2024 - 10:00am
While ours may be an age of polarisation, a rare zone of consensus in British politics is the admission that the country is struggling. Unfortunately, the agreement ends there. Because while declinist rhetoric is now so commonplace as to be mundane, what the country does next, in attempting to overcome our malaise, remains as contentious as ever.
This week it was reported that Government borrowing rose last month, marking the third-highest September since records began in 1993. This underscores how, in addition to no productivity growth, expensive energy, insufficient housing, and an ageing population (among other things), the UK is facing a potential debt crisis. Last year’s deficit was £120 billion — with public debt hitting 100% of GDP over the summer. Perhaps most concerning of all is that interest payments on our national debt have doubled in recent years, from around 5% of total Government spending to 10% (or £116 billion) — broadly the same as defence and policing combined. According to the OBR, the present trajectory means that net public debt could reach 274% of GDP by the 2070s.
When a country’s productivity doesn’t grow for 16 years, and its outgoings do, tax rises become inevitable. The formulaic response to that, at least from some, is that expenditures should be cut instead. But this increasingly reflects a lack of realism as to where taxpayers’ money goes. The English county facing the largest budget deficit? Prosperous — and Conservative — Hampshire, with 83% of Hampshire County Council’s expenditures going on child and adult social care. That’s an increase of £420 million a year when compared to 2010. Over the same period, funding to the council from Westminster has fallen by 46%.
Of course it’s a balancing act to reduce the deficit, and improve public services, without dampening economic activity. Here, however, there was some rare good news on Tuesday with the IMF upgrading Britain’s growth forecast for 2024 from 0.7% to 1.1%. Low inflation, rising real wages, and surprisingly expansionary output: it does make one wonder why Rishi Sunak didn’t wait until October to call a general election. Tax rises will invariably hurt those on the receiving end after next week’s Budget, but falling prices, and cheaper costs of borrowing, will ease the pain.
But where precisely might Rachel Reeves find the money she needs to not only reduce the deficit, but fund pay rises for junior doctors and rail workers? Separate from her admission that she is changing fiscal rules to allow for up to £50 billion more borrowing, one suggestion has been the introduction of employer national insurance contributions on pensions — something which would add up to 2% to the cost of any company’s payroll. Another mooted shift has been an increase to capital gains tax, with an exception being made for the sale of second homes. Then there’s the sleight of hand which will keep tax bands where they are, widely referred to as “fiscal drag” — a particularly effective ruse given wages are rising rapidly.
Finally there is inheritance tax, where the Chancellor may look to change the present “seven year rule” on gifts. At present, assets passed on seven years or more before an individual dies aren’t subject to inheritance tax, while those that fall within this period are. One easy win for the Government would be bumping this up to 10 years. Between all of these measures, the Government could expect to raise a significant amount. The changes to NI contributions alone could generate as much as £17 billion annually. And that “stealth” freeze to income tax thresholds? That could add up to £7 billion a year to the Exchequer after 2028.
Britain now spends as much servicing its public debt as it does on education. Nothing works, and the social contract has broken down between the state and anyone under 50 — or who hasn’t benefited from a decades-long asset boom. The only serious response to all this is accepting that the country will need to become more productive, make hard choices and raise taxes — on wealth in particular. The alternative, in the long term, is something resembling state failure. This is the dark road Britain is going down. And next week, as Reeves delivers her first Budget, it’s something her critics should reflect upon.
Aaron Bastani is the co-founder of Novara Media, and the author of Fully Automated Luxury Communism.
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SubscribeReasonable summary, but need to mention the vast wealth hoovered up into property – it is stifling.
Central bankers in the West have impoverished us all more than any other factor.
This.
?
There is only really one solution: stop bleating about the horrors of ‘austerity’ (always hugely exaggerated) and cut public spending.
Just frickin do it – 20% across the board.
That is exactly what Javier Milei the Argentine President has done. Put many Public Sector employees on the dole to sample the free market where dog eats dog.
Meanwhile Bastani’s beloved Marxists in charge as the current Government employ more and more for their client state with Zero productivity while bleeding the private sector dry with tax rises. I still believe the IMF will be visiting us again in say two years time.
A bonfire of regulations would also not go amiss.
Oh, and Energy policy should be about making sure there’s enough energy available, as reliably and cheaply as possible.
An article penned by one who advocates a Brave New World future…and that bias shines through…
Aaron deftly overlooks the several trillions of unearned property wealth that the metropolitan class to which he belongs has acquired thanks principally to New Labour policies, which is enough to pay off the debt.
Twice.
This wealth is not unearned. The only unearned wealth is property taken in breach of the law. Buying a big house in London and then watching a bunch of politicians play silly buggers with the money system, accidentally tripling the value of the house you bought, that is not a crime, and should not be treated as such.
It wasn’t a crime but it is still unearned. It is almost the definition of unearned.
Fixing that, perhaps with a land value tax, is essential to direct national effort towards productive investment and labour and away from playing the system for profit and trying to maintain the status quo.
The level of your IQ is unearned. So is the gleaming beauty of that girl down the street who went on to become a fashion model, while her sister is a hairdresser. That’s unearned assets for you – not just unearned, but also inherited. Should we do something about equalising that too? Facial Justice?
IQ and beauty are not provided by Govt / central bank policy at the expense of someone else.
A more applicable example (though somewhat extreme to make the point) would be if the govt made shoplifting legal, and all the food stores got cleaned out whilst you were at work and you went hungry. Would you be fine with that?
This always touches a nerve, doesn’t it? No-one said it was a crime. But, for all our sakes and those of future generations, the wealth quite deliberately taken from productive activity and given to property owners as bribes by dishonest politicians should be recovered in preference to taking still more money from productive people.
With 90% of the population under 30 soon to have Mental Health issues or SEN needs every council in the country will soon declare itself bankrupt. Middleclass yummy-mummys in Hampshire will not want to miss out on their spot in the lifeboat.
The crash of 2008 and Covid increased debt in virtually every western developed country. But UK also played a poor hand last decade plus, crushing growth with austerity & Brexit, failure to fully appreciate the weaknesses in the British form of investment capitalism, crippling the public realm and crucially failing to make the most of historically low interest rates with national investments. Having a Party in power spending half the time engrossed in it’s own psycho-drama added to the toxic cocktail.
And thus we ended with the mother of all hospital passes to the new Govt. They’ve made some mistakes in the few months in power for sure, and the Right wing media delighted after a decade trying to defend increasing stupidity that it can go back to what it likes best. But Author is correct – it’s heck of a tightrope to walk now and it needs a project that stays the course for longer than the next media headline.
Everyone talks about growth. What is it? The only growth that I see is of the green variety. Is green growth, which limits our lives, which gives big contracts to friends of the Labour Party, which makes our lives miserable and hopeless, really useful growth. Is it something that young people can dream about?
The reason that there has been no growth is a confusion between Environment and environment. Environment means the world and environment means our lives. So, some idiots have decided to destroy our environment for a theory, a computer model.
Growth could be infrastructure – roads or rail. Politicians don’t want roads because of the Environment and people don’t want trains because of their environment.
Could growth be the NHS? Gordon Brown was the one who allowed GPS to reduce their hours. Where is the growth?
Could the growth be finance? Maybe, but only in London.
Tech growth? Designate somewhere – Manchester? Newcastle? Bristol? – and put actual incentives for tech entrepreneurs to set up shop there. The UK is already the hub for Europe (London far outstripping its rivals) but maybe try to share that around. My favoured place would be Milton Keynes: modern, growing, equidistant from Oxford, Cambridge and London.
We do have great ability to generate medium size tech companies. The problem is they get to a certain size and can’t access the next phase of investment capital they need. Hence they get gobbled up and the centre of gravity of the business moves abroad. It’s a more complex debate about what stops UK companies accessing capital esp when we have trillions in pension funds and the City of London. We should not have this problem but we do.
It’s more about U.K. taxation of larger companies than of the much smaller issue of access to capital. If profitability was not going to be so heavily taxed, then investment funds would be readily available.
I’ll give it a go Caradog – pick yourself up off the floor when you finish laughing
SNRs: we are world leaders in small nuclear reactors. We don’t need to maintain current energy levels, we need an abundance of energy if we are to fuel AI, currently our only “super productivity” option on the radar. We should move to emergency planning and build out nuclear (the densest form of energy we currently have) to produce super capacity to create the CHEAPEST energy in Europe, if not the world, to attract inward investment and survive the trade “iron curtain” that seems to be manifesting. Let’s be energy exporters as we were int he 1970sHousing: we need to build more homes. However, we will not succeed with Raynor’s plans which are targetting the wrong locations (eg cutting London targets and over-building in Northumberland) and which seeks to sequester land through CPOs (hitherto landowners got 100% of the land value; now govt wants 100% of the land value. Neither will work)Higher Education: immediately invest in Apprenticeships in trades aligned to our infrastructure strategy (energy, housing) which deliver levels of certification which offer a serious alternative to a degree (the devaluation of a degree and the revaluation of an apprenticeship will meet halfway). If universities resist make them the deliverers of said apprenticeships solving both problems, particularly those most at risk of closure (the old polytechnics). Award excellence in apprenticeships rather than a narrow elite set of institutions.Cut regulation: move immediately to a 1 in, 1 out legislative system to stop creep. Then identify the 80/20 industries aligned to your growth strategy (energy, housing, etc) and then identify the 80/20 of regulation creating barriers. Work on the assumption that you will cut the legislation unless it can truly be justified (upend the psychological approach), and set up “trade off” investigation teams who are looking at 1st, 2nd order effects and are taking a holistic approach. Use these approaches to change the mindset of the Civil Service. Mindset: any turnaround requires a growth mindset. PM needs to be creating a vision, and moving spirits as well as brains and brawn. At these points, the narrative must be clear, incessant and followed through by consistent values. Specific to the UK we need a sense of collectivism (in the apolitical sense) – atomisation is the enemy of success. I suggest any narrative must include nuggets of the national story to create this, and more discussion of our responsibilities to each other than our rights. I see plenty of mental firepower on these pages to produce a better list than this.
Thanks for this – a good answer and I do not laugh.
In general, I am not an economist so I have a problem with the idea of wealth of a country. If you build SNRs, I am 100% in favour as we can sell the energy and the technology and the education opportunities.
Yes, we need a positive mindset – the idea that we are all fighting together to achieve a common goal. Like after a war, when people have been destitute. I was brought up on a council estate where people were so happy to have electricity that they didn’t mind a pylon in their front garden. Today we have the opposite; even defined poor people have everything, just not as much as other people. Without a war a great leader would be required to wake everybody up.
Any industry which makes us self-sufficient in food and energy is important. I have a real problem with NetZero, which I will not bore you with.
The Mickey Mouse degrees we have are a problem for a whole generation of students who will have nothing to offer. Apprenticeships ten times better but it would only take a few years to have a surfeit of builders, plumbers and electricians. They wouldn’t actually generate wealth, though, would they?
We need plumbers and electricians but we also need tech specialists and software engineers. We need to also sometimes recognise UKs best exports are in services and often related to our language – media, arts etc. There is definitely a need to rebalance Further Education but just got to guard against over simplistic forward planning that fixates on the jobs of the past not the future.
And why aren’t they bringing in the wealth tax we’re all waiting for?
You seem to be labouring under the misapprehension that The Labour Party is not a party of the rich.
The point of income tax is to tax income. Ie when one has the cash in hand. On first principles this means CGT should be levied on all house sales if wealth is too be taxed.
And yes, the state should do less and do it properly.
Given that Starmer gets £107k of free gear without paying any tax, and has a personal pension plan codified in law, I wouldn’t hold your breath. Although his brazen hypocrisy may not stop him, and ginger top (she of the “I bought my council house, but you can’t buy yours”) certainly won’t baulk if she’s the mid-term successor ….. on current performance hard to believe he has 5 years in him, let alone us having 5 years for him.
Mr Bastani is a self-confessed communist. He is very clever and appears every week on GBNews, saying similar things.
He talks about productivity – what does that mean exactly? If you work making widgets, you make more with the same labour; if you work in the NHS, you walk faster from ward to ward? Or a surgeon does more operations in a day? Or GPs work a full week with their patients? Or nurses do more cleaning? Could train drivers work longer hours for the same pay? Using the vague term, productivity, is meaningless. From a communist, improvement of productivity focusses only on the middle classes, especially the non-unionised middle classes.
Then there are social costs, mental problems, etc. How do people on benefits increase their productivity? Is nothing at all expected from people on benefits?
In Mr Bastani’s world, there are people richer than him who deserve higher taxes, and people poorer than him, who could never be troubled. Pensioners, of course, need to be hit the hardest. Same old, same old.
There are a few of possible scenarios. The first, is that the country struggles on and hits the buffers eventually in 2050 or so when the combined impact of unfunded public sector pension liabilities and debt interest take most of the tax take.
The second, sort of outlined above is that wealth is taxed more and some effort made to contain expenditure – this will fail as the wealth will depart. Implementing exchange controls will accelerate that, the tax take will shrink and the country goes bust. Same as 2050 scenario but faster.
The third option is to grow GDP per capita, which will increase the pie size and permit current levels of expenditure but at a reduced percentage of overall GDP. However this will require cutting huge swathes of legislation and red tape, encouraging entrepreneurship and business, scything through the quangocracy and creating the environment for growth. Doable, but not I suspect by the current government.
The good old rhetoric that wealth will depart. But it’s exaggerated. Many assets like real estate can’t even move and governments can create a system where capital movement is simply more restricted. Like we saw during the postwar period.
However, more importantly, it probably doesn’t even matter. If anything it seems that modern economies have a huge overabundance of liquidity after 15 years of QE and low real interest rates. Again and again this all flows to extremely overvalued assets where it does’t do much except rent seeking. Simply because that’s a much better way to secure wealth than investing in something potentially innovative and productive in the real economy. In that real economy demand (and not so much supply) remains chronically low despite all that enormous increase in wealth at the top. Some prominent economists have called this situation secular stagnation. I think deregulation is not enough if economies like the UK are still highly financialized.
Exactly.
With IFS, IEA and even New Ststesman stating that tax under the conservatives has already been decidedly progressive, it will be interesting to see where this goes next. Clearly favouring wealth over labour, and property in.particuar as an immoveable object, but unless the OECD’s global wealth tax (successor to minimum global corp tax) comes into play, then the data suggests collection is dificult and disappoints. The same think tanks point out that the admired social democratic countries (Scandinavia an example) spreads tax much more broadly across the middle, collecting more with fewer distortions.
Since over 50% of the population pay no tax, there are clearly deeper structral issues at play. Worklessness a failure in training and development, and tax disincentives create a diffvult backdrop. I was astonished to hear a ministrr.say lasteeek that if training came out of capital rather than current expenditure they ould do more of it.
The situation, in my view, cannot be resolved through the usual measures. There will to be a crisis and a reset. It will be interesting to see what event manifests, or is created, to enable it.
Mr. Bastani parrots the same old, irrelevant talking points. National tax in a country like the UK doesn’t pay for government spending. The national government doesn’t need tax revenue. It always has the money it needs to service whatever it owes. The “deficit” is a scare-word without substance, a piece of propaganda. It gets people to vote against their own interests.
Government debt is just a historical record of the money the government spent into the economy and didn’t tax back (tax at the national level not being needed for revenue). It’s a historical record of when it made a net deposit. The deficit is just the government spending more into the economy than it takes. It’s almost always in deficit and the private sector — the other, receiving side of the balance sheet whenever government spends — in surplus.
If a country with its own currency, like the UK, drops into neglect, that has little to do with deficits, and a lot to do with political choices.
Ah, our old friend Modern Moneytree Theory raises its ugly head again. Why worry about running out of the stuff, eh? We can always print more.
Money is not the same thing as wealth.
It’s extremely common for people who are ignorant of MMT to nevertheless have bold critical opinions about it. The above is representative.
Such complaints are of course irrelevant and should be set aside until there’s an indication of at least some understanding.
MMT is just a way of interpreting the mechanics of modern economics, not a set of policies or a blueprint for a certain kind of policy. It’s about accurately describing the monetary system that actually exists, and government finance.
So why is simply creating money for Govt spending not inflationary?
Great question. “Simply” creating money could well be inflationary! But among the heterodox economists I’m speaking of, none advocate spending blind like that.
They argue that the risk of inflation is determined by 1) lack of productive capacity 2) abuse of market power/price setting. With respect to #1, inflation isn’t sparked simply by the amount of money the government creates via spending, but by competition for a limited supply of resources that this money tries to get.
The national government can always afford a given program since it can always create the money to pay for it. So the real question these economists ask relates to material constraints. A government can’t “simply” buy whatever it wants, in any amount, at any pace. There are internal limits.
Thus you find that a major concern of these economists is material constraints. You can’t commit to large-scale infrastructure investment, for example, unless there is enough labour, machines, and materials.
Fortunately, with careful planning we can expand capacity (e.g. more nurses, hospitals, etc), which in turn means creating greater spending capacity/fiscal space. Which in turn pushes inflation risk further off.
Rather than assuming right from the get-go that government has to plan to withdraw a pound for every pound it wants to put into the economy, the idea is to model and learn whether, and how much, a tax cut or spending increase needs to be offset.
And the government does have a choice of effective ways to control inflation. E.g., it can withdraw some money out of the economy by scaling back programs, or by increasing taxes.
The orthodox idea is that taxes bring revenue to the government, which needs it to spend in the first place. The heterodox idea is that taxes (on the national level) aren’t to fund spending, but to withdraw money from the economy, preventing the non-government sector from using up resources, in turn opening space to absorb government spending at its desired scale in a non-inflationary way.
So what you are saying is that provided there are enough machines, labour and materials, creating money for Govt spending is not inflationary. This is because, with careful planning, the people providing the machines, labour and materials do not get any extra money as there are more machines, workers and materials to absorb it.
So provided we have an ever expanding supply of workers, ie immigration, and materials, ie environmental exploitation, there is no issue?
However, in the real world immigration and environmental exploitation cause issues. Physical and cultural accompdation has to made for immigrants, excessive exploitation of the environment destroys it (and resources are finite, or perhaps just bought by someone else). So whilst there may not be inflation, there are harms in the form of reduced standards of living.
And does all the extra money stay within the expanded part of the economy, or does some ‘leak’ out to the wealthy, who then use it to buy assets like property thereby causing them to rise in price (conveniently not included in inflation measures) making them out of reach of ordinary people? Destroying their ability to, for example, have families, provide themselves security or retire?
Thanks for the explanation. I always knew MMT was b*ll*cks but now I have more grasp of the details of just why. Plus a better understanding of why and how we’ve got into the absolute f*ck*ng mess we are in.
Those are your words, not mine. Nothing I wrote implies such a thing.
Same.
The next paragraphs build on the previous straw man.
You’ve made a conclusion based on your own made-up closed-loop thoughts, not mine, not anything resembling the economic analysis I introduced. Not too impressive.
In my original question I asked why spending by creating money is not inflationary. Part of your response was
“The risk of inflation is determined by 1) lack of productive capacity … inflation isn’t sparked simply by the amount of money the government creates via spending, but by competition for a limited supply of resources that this money tries to get.”
So in the case of labour you have stated that if there is a limited supply of labour it is inflationary ie there are wage increases. Therefore, for it to be not inflationary, ie no or little wage increases, the supply of labour must not be constrained. Or, as I put it the first time
“labour … do(es) not get any extra money as there are more … workers … to absorb it.”
So, whether you realise it or not, you have implied it.
In the next step I queried how we get to have an unconstrained supply of labour in the real world, something you did not bother to address.
As far as I can see you have swallowed a lot of words economists have told you without any thought for what they mean in practical terms. So whilst you have explained why the Govt could just create money to spend without it being inflationary, you haven’t considered the implications, what it means for the population or whether or not it is a generally good thing in the round.
Furthermore, what you have described sounds an awful lot like what we have gone through for the last 25 years or so, and in case you haven’t noticed everything is becoming dysfunctional.
Nothing I wrote implied “labour … do(es) not get any extra money as there are more … workers … to absorb it.” There’s no reason to reach that conclusion about the supply of money to go around for the additional people put to work.
With regard to involuntary unemployment, a public option is a job guarantee program. It wouldn’t raise spending beyond that necessary to create full employment, with no giveaways to the rich. It would be a stabilizer that automatically contains inflation and deficits: the otherwise unemployed act as an employed buffer supply that can be released when the private sector demand for labour rises. This would avoid many of the harms that spring from the current, incredibly cruel policy that is based on a so-called “natural” rate of unemployment. The JG would be an automatic demand stabilization strategy (no need for government to constantly react and adjust in real-time), a supply-side booster, and way to save public money otherwise spent on trying to fix the social damage caused by unemployment in the current system.
There are books and online courses on MMT and the Job Guarantee, as well as recorded public lectures. For those with open minds, I would encourage having a look, to learn direct from source, to reach an informed opinion.
It is even more common for people who espouse these ideas to patronise and insult those who question them. This is a consequence of intellectual weakness resulting in an inability to make a coherent argument.
Except you didn’t “question” anything, but instead chose to condemn a field of study you then showcased having no knowledge of. Intellectually nothing, no coherent argument whatsoever, introduced with the patronizing cliché “Ah, our old friend” as if well-versed in the subject.
I respect curious, questioning minds. That’s not exactly what you demonstrated.
Gilt investors NOT ” The Government” service the debt!
In 2020 much discussion that technically the UK government moved to monetisation of the debt passing between treasury and BoE. In 2024 Yellen’s pursuit of short-term treasuries is clear monetisation, as Druckenmiller has called out. I am starting to see MMT is poking its head above the clouds …. again. And the US election will be critical in this regard. Brainard moved out of Fed into government and Powell is due for re-election in 2026. If Harris goes in as President, then “Braindead” will probably be the next fed chair and that leads us in a very particular direction, which worries me a great deal. I don’t believe Trump would necessarilty stop the trajectory given the global debt situation, but he’d buy us more time to work out where we’re going to sit it out.
Entirely agree that the UK is more dependent on the “kindness of strangers” than other countries, but I think there are other moving parts in the system which cannot be ignored.
The author mentions asset prices are high, but fails to mention it’s because of the high deficits and money printing by central banks in cahoots with governments everywhere , especially since 2008, without the massive increase in debts there would have been a global recession and a crash in asset prices. In other words it’s a debt generated ponzi scheme, they won’t be able to stop it without a crash
Or a land value tax.
Exactly. They printed more money, didn’t build more houses, lo and behold the value of a house has risen relative to money. Or put another way, the value of money has fallen relative to houses.
It’s hardly surprising that one of the wealthiest counties has the highest debt. It costs more to live there so all public employees are going to require either higher wages or more subsidised housing to live there compared to workers in a county where rent is comparatively cheap.
Rural counties also have higher costs due to transport distances and times (e.g. for care workers travelling between small towns and villages) which applies less in a city where there tends to be public transport and shorter travel times.
“The only serious response to all this is accepting that the country will need to become more productive, make hard choices and raise taxes — on wealth in particular.”
The rule is always simple here: whatever you want less of, tax it. In this case, taxing wealth will result in wealth destruction. But since this wealth is exactly what the GDP figures are based upon, there will be no growth against which to offset the rising debt/GDP ratio.
‘Annual income 20 pounds, annual expenditure 19 pounds, 19 shillings and six pence, result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery.’ Mr Micawber.
There is no version of what Reeves is about to do that is going to do other than dampen the economy – and with it tax revenues. The idea Reeves can raise taxes on wealth is for the birds. The truly wealthy have their wealth embedded within corporate structures and trusts and the like and spread out across countries, with too many means at their disposal, including accountants better than any the government can muster, to bypass anything Reeves can conjour. What she can hit is the people in the 90 to 99 percentile on salaries, say 70K to 500K, climbing a corporate ladder, by curtailing corporate pension contributions and employer NI, since Labour have ruled out other types of employment taxes. These are people in the professions, not in business, upper quartile, lawyers, managers, STEM and IT, and so on, and you have to remember these are amongst the most globe savvy mobile people, typically in the age range 28 to 58. I am just one single person, but I anecdotally know of several people who are eyeing enviously salaries in the US and Aus and so on, and discussing with me: why am I in the UK earning literally half – something I have not experienced before through my entire working life. These may not be people who will walk away instantly, but I can see they will walk away over the next few years, and I’m guessing the corporate response will be to outsource to India or get even more educated Indian labor over. Either way, Reeves is not going to get what she thinks she will. Nor is she from the ‘big borrow and big spend’ she is about to embark on – I am willing to bet the big spending reveal in the budget will be about spending big to generate green energy. I am sorry to disappoint the author, but as someone who can interpret a bunch of figures, I can tell you nothing adds up about UK green energy unless you make a number of heroic assumptions. I don’t care about the fact that battery charge points and wind farms and pylons look ugly as sin, I am going by looking at what is happening in other countries which are further down the path of building green infrastructure like the US and Germany, and their results are disappointing so far (if they weren’t I can tell you a lot of people would be shouting very loudly right now). What I mean is, there is (probably) a path to cheap green energy, but it’s closer to 15 rather than 5 years away, and requires something of the order of a trillion infrastructure spend in the UK. So not realistic in the current situation when the bond markets are bearing down on you like hawks. My other question is, people like Miliband and Reeves unquestionably know what I am saying is the case, so why are they not up front?
I can’t comment much on the main element of your comment, but as far as the green energy discussion goes. The winter fuel allowance is expected to cost £2Bn even after the scrap, (pension credit and means testing.)
Well a solar PV with battery system costs £12k. And adds 4kW peak but more importantly at least 10kWh storage for grid stability. In Winter that drops to around 0.5kW generation.
With government owned grid tie in, that fixes the redundancy and grid stability issues and peak and trough demand issues. This makes nuclear more advantageous as a base load supplier and wind cheaper as it should never need shutting down if supply is too high, simply charge the batteries more.
The budget allows us to install solar PV with grid tie batteries to 160, 000 houses a year.
Thats a 1.6MWh battery and 0.64 MW solar install for the country. In addition, making electricity cheaper due to the reduction of fossil fuel power station use.
Plus a lot of additional jobs created installing and maintaining.
Permanently removing the need for that person to need to claim. But there are 11 million people claiming it. So at only 1% of the total need extra funding… £200Bn.
They generate more than £400 value a year. Approx £1400 at current energy prices. Fit it to council houses of pensioners who are also the most likely to claim. Take that extra £1000 and use that to aid the cost of the next round of installs. Stop allowing council house tenants to buy their housing at a discount rate.
Do this for 12 of the 15 year warranty period and they have paid for themselves (Very few government expenses do that.). The remaining lifespan of at least 3 years, use to reduce the council tax burden for a council. It won’t be much, but it adds up.
How do we fund this 1% a year reduction which peaks at 15%… Easy. Don’t subsidise privately owned fossil fuel companies £2Bn like we did last year and are on route to do this year.
My entire problem with the replacement green energy sources to replace hydrocarbon based electricity is not energy production per se, but the battery based energy storage infrastructure support needed. The problem is that production falls off for months out of season so greatly that very significant storage is needed. There are localised geographies where this can work year round but it’s all hit and miss. The type of technologies I look at with great interest is things like Tesla’s battery farm in Australia, and the efforts of the Californian grid providers to build mega Li-Ion facilities. Even with nuclear as a base, to my eyes the technology simply isn’t there yet to make this tenable. Large scale battery based storage is expensive and has at the the moment very big safety and longevity issues. That is not to say the technologies couldn’t eventually be made cheaper and long lasting – but someone would have to prove that this can eventually be made to work at reasonable cost, but no one has yet.
Watch for the hedge funds and prop traders, armed with derivatives and synthetics launch a full out attack on Sterling and gilts markets, across the yield curve? Remember the Callaghan disaster? However, the Labour majority ensures that nothing can happen that deposes them… so what will happen? Totally uncharted territory of the most frightening scenario…
I predict that the Reeves budget will produce a much more severe replay of Callaghan’s last days, when the powerful stockbrokers of the day the then relatively few institutions who were the gilt markets core investor holders, ironically then counting the big Union pension funds as well as the big insurers, to go on ” gilt strike” as the City’s powerbases way of getting rid of the Labour government and open the way for Thatcher, back in 1979.
However this coming budget, electronic trading, hedge funds, prop traders and derivatives, including synthetics, have the opportunity and power to make massive sums of money by slaughtering Sterling and gilts across the yield curve, and if The Government and DMO decide to attempt to ” defend” Gilts and Sterling, so giving the hedgies and prop funds ” a certainty”, nu britn will financially collapse. John Majors defence of Sterling and gilts after the ” shadowing the DM” debacle, actually resulted in HM Government had to take out a syndicated loan, as the gilts market would not ” bail out” his losses, led by the then Citicorp Investment Bank, supported by mainly Japanese lenders.
Of course, Starmers majority will mean that nothing ‘ legal’ can be done to get rid of his government… which begs the question as to how close to some other form of revolution we could get?
Addressing international adventurism like Ukraine and offloading Britain’s remaining overseas obligations, far and near, including the partition of Ireland (time to end that), would help.
Muddy thinking gone backwards. The idea that the government needs morr of our money is hilarious but also mainstream. Oh well another few years will wake us up