I was recently invited by Supporters of Nuclear Energy (SONE, General Secretary Sir Bernard Ingham) to set out UKIP’s stall on energy policy at their AGM in the Institute of Civil Engineers in London. I was delighted to do so, and I was well-received.
I was particularly struck by SONE’s newsletter before the AGM, in which they said that generally SONE did not take political positions or endorse political parties, but they had made an exception in the case of UKIP’s energy policy, since UKIP is the only UK party with a rational position on energy. Naturally, I was flattered, as I had written the UKIP energy policy (in conjunction with colleagues).
But really they were stating no more than the simple truth, and since that newsletter, the position of the three old parties has if anything got worse.
Miliband has announced a Soviet-style price-freeze, which would do nothing for hard-pressed consumers — indeed it’s quite possible that Miliband’s threat has resulted in the current round of price increases being greater than would otherwise have been the case. And any price freeze would put paid to the investment in energy infrastructure and generating capacity which the UK so desperately needs. The threat of a freeze greatly increases the risk of blackouts in the short/medium term. If in any doubt about the absurdity of Labour’s plan, do read this piece by Professor Dieter Helm, of Oxford University, one of the most rational voices today on energy economics.
One might have hoped that the Tories would at least have some grasp of the economics, and some sympathy for market-based solutions. But that happy thought was knocked down by Sir John Major’s windfall tax idea. At first I thought that this maverick concept would be anathema to Downing Street, but the next thing we read is that Cameron and Osborne are flirting with it. I Tweeted “Who gets the prize for economic illiteracy? Miliband’s price freeze or Major’s windfall tax?” In fact both ideas would increase prices and block investment. So well done Ed. Well done Sir John. You’ve each managed, quite independently, to come up with a lose-lose policy.
As for Clegg’s Lib-Dems, their policy seems to be “Something must be done” — but not, of course, if it prejudices their precious green policies and taxes and subsidies, which are driving up energy prices for households and industry, forcing pensioners into fuel poverty and moving businesses, jobs and investment offshore.
The particular absurdity of Major’s windfall tax is, of course, that there’s no windfall. The price rises announced by energy companies are driven by the underlying costs of fossil fuels, the costs of green taxes and subsidies, and the grid infrastructure costs of distributed and intermittent generation — not profiteering. The rises in fossil fuel prices largely reflect our failure to use cheap coal, and our failure to give adequate urgency to shale gas exploration. Energy prices are escalating because of decisions which politicians have made (or failed to make, in the case of shale gas).
We’re read a lot recently about the drama surrounding the Grangemouth chemicals plant, Scotland’s largest industrial site, which was threatened with closure. At least one factor in Grangemouth’s plight was the high cost of energy, and of imported gas (which is not only a fuel but is also a feedstock in the chemicals industry). The decision to keep Grangemouth is presented as an industrial relations story, and a disastrous defeat for the Unite Union, and in part it was. But I am told that one consideration in the decision to keep Grangemouth going was the prospect of importing cheap(er) gas from the USA.
I’d be delighted to see cheaper gas from America alleviating our energy problems. But I’d be even more delighted if we were using our own British shale gas, creating jobs and profits and tax revenues in the UK rather than the USA.
Meantime, if you’re concerned about energy and you believe that UK energy policy should be about secure supplies of affordable energy, there’s only one party listening. UKIP.