A budget Enron would be proud of
Osborne has been accused of using accounting tricks to hide a £56 billion hole in his budget. Falling growth and the risk of Brexit over the referendum have all pushed down the economy and this will soon have a knock on effect on tax receipts. Yes, he brought in new taxes, but he’ll have to charge a heck of a lot for sugary drinks to fill a hole this big. Even the Office for Budget responsibility (which he set up) are sceptical, while the IFS has warned of a risk of wages falling and that Osborne is “running out of wriggle room” in terms of his ability to meet his own economic targets.
Furthermore, it is claimed that the numbers in this budget don’t add up and don’t match Osborne’s previous claims. Its considered unlikely he can meet his own fiscal rules, he will not get rid of the deficit, nor run a surplus at any point in the future and will likely have to borrow much of this missing £56 billion. In short, we are seeing the very same thing as seen in other countries who went down the austerity route, stunted growth leading to falling tax receipts. He’s just been a bit better at hiding things.
And again we see the same game, tax cuts to the wealthy (moving the thresholds for the top rate of tax), while cutting disability allowances, or an across the board cut of £3.5 billion (where that’s going to come from nobody knows, my guess is they’re going to be lifting floor boards and selling off the lead in the roof’s of government buildings). Like I said, Enron would be proud.
The reality of course, is that this austerity was never about getting rid of the deficit, nobody has borrowed more than Osborne, yes he has now borrowed more in a 5 years than the Blair/Brown government did in 13 years. It was always just an excuse through which the Tories could gut public services that their wealthy paymasters didn’t use. While at the same time providing them with tax cuts and the opportunity to buy up public services (such as the NHS) and milk them dry, much like Thatcher did with things like the Railways and power companies.
Hinkley C, going full circle
Speaking of which, there was both positive and negative news this week regarding Hinkley C. On the one hand, a letter to staff seemed to indicate that its likely to go ahead, despite recent set backs (resignations of senior EDF staff, a halving of the share price, questions about the financial survival of EDF if they proceed). However it also indicated that this is now dependant on French government support. As the chairman of the House of Common’s energy committee pointed out, these latest developments raise serious doubts about the project’s viability. Largely because, as of now, almost every promise we were made about Hinkley C has been broken.
Let us rewind the clock. Originally proposed back under the Blair years (yes, that long ago!) the nuclear industry claimed that Hinkley C would be cheap, competitive, could be built in just 46 months and the nuclear industry actually didn’t want any subsidies. They just wanted the Greenpeace brigade off their back. And indeed a number of very naïve people, such as Monbiot or a number of other pro-nuclear environmentalists, did indeed lobby on this project’s behalf. The government passed various bits of legislation to ease the process of planning and streamline the building of the plant.
Unfortunately, what nobody picked up on was the fact that the nuclear lobbyists blinked three times or rolled up a trouser leg every time they said they didn’t need a subsidy. This was a coded message to indicate that actually they did need one, they just didn’t want to admit it. Eventually, after various abortive attempts (notably trying to turn Green Investment bank into a pro-nuclear slush fund) the previous coalition government worked this one out. And they offered a subsidy at a rate nearly three times higher than what’s on offer for solar (per kWh) and five times the wind power subsidy rate. But we were assured this didn’t matter as nuclear power is a “special” form of power and it would mean no government capital would be put at risk…….
…Only when EDF tried to raise that capital, the markets laughed them out of the room. They were simply unwilling to invest in such a high risk project, particularly as nobody could give them a firm estimate of how much the damn thing was going to cost (its drifted from £6 billion under Blair to £18 billion today and I’d guess more like £20-25 billion myself when its actually finished). Seed money from the state or a state guarantee was needed. And so they got both, the Chinese state nuclear energy company agreed to put up a third of the cash in return for the UK government agreeing to be the guarantor.
From the beginning environmentalists were assured that it wasn’t a case of choosing nuclear or renewables, we could have both. However its clear from recent subsidy cuts that this was a lie. Renewables are being killed off to make room for Hinkley C, as its business model can’t compete with Renewables. Both CCS and coal have also been killed off as alternatives. Yet still the financial industry is not willing to commit to the project. So in desperation EDF have now turned to the French taxpayers to fit the bill.
Getting the French and Chinese taxpayers to do this whole “socialism” thing for us might seem like a good idea, if you’re a Tory and its against your religion of Thatcherism. But its actually a terrible deal for the UK. Recall the UK taxpayer will be liable if the project now falls apart. And the Chinese and French get to charge three times the market cost of electricity for the next 40 years. This is the point the HoC energy committee is making. Even if you are one of the few who thinks this project is a good idea, we’d get far better value for money just buying out 100% of the project and building it as a national infrastructure project.
And least we forget the UK needs at least five Hinkley C’s just to replace its historical maximum nuclear output of 16 GW’s. The follow on plants are unlikely to arrive any time soon, certainly not before the remaining 8 GW’s retires. And with renewables knocked out of the box, its likely to mean a new round of gas fired plants being built, which does not bode well for commitments to cutting green house gas emissions.
In short every promise made by Hinkley C’s supporters, be they Monbiot, Mc Kay, the DECC, the Royal Society, etc. has been broken. By contrast the views put forward by the naysayers, be they the banks, Prof. Steve Thomas, the WNISR authors, the New Economics Foundation or indeed myself, have been proven correct. As I’ve said before, Hinkley is shaping up to be the hill on which the nuclear industry might well die on.
Clarkson backs the EU
Jeremy Clarkson surprised many over the last week by coming out in favour of the UK staying in the EU. Yes, the man who likes to mock the French and German’s relentlessly wants the UK to remain part of the EU….presumably so that he can continue to mock them and make jokes about Agincourt.
Indeed, he actually argued far beyond simply staying in calling for a United States of Europe, much to the horror of many of his petrol head fans I suspect. However, I would take this as admission from Clarkson that most of his show is just an act. And in essence he’s saying a joke’s a joke, but its not funny any more when people’s job’s are on the line.
And of course leaving the EU will have an impact on employment, and what’s left of the UK car industry will take a hammering. Many of the UK’s car companies are foreign owned. Parts are brought in from factories all over Europe (indeed much of the UK car industry is parts for export to Europe) and assembled in the UK (or elsewhere). Something like 75% of UK made cars are built LHD for export. Inevitably post-Brexit, it will be all too tempting to shorten supply lines and move production to the continent.
And of course, its questionable whether his Amazon gambit will work with a reduced audience. And increasingly it looks like a vote for Brexit is a vote for Scottish independence and a vote for Boris “bike” Johnson as PM. Needless to say, Clarkson probably has visions of the M6 being turned into a bikeway! So his position is entirely understandable.
Should you wonder just how crazy, fanatical and heartless the Brexit camp are here’s an example. Brexit will cause all sorts of economic problems, particularly if any form of restrictions to free movement of workers is introduced. While there are unemployment black spots in Britain, generally in ex-industrial areas (devastated by Thatcher) or ex-sea side resort towns (losing out to cheap package deals). But overall there are labour shortages for things like skilled apprentices or farm workers.
A vote to leave the EU will devastate farming, with some farmers claiming they’d be forced to leave crops rot in the field. The Brexit camp solution, oh we’ll get pensioners to go out and pick the crops. Why they’ll need the work and money so badly (given that without the tax receipts from EU citizens its doubtful the UK can pay pensions any more) they can even be paid less than minimum wage. Its the sort of story you read and hope its April fools day!
What this shows is how those behind Brexit are not the champions of British freedom they claim to be. In truth they are the wealthy, the corrupt and the despotic who want to turn the clock back to a time when there was an upper class and everyone else, when the serf’s knew their place.
Indeed case in point, the recent EU agreement with Turkey to stem the flow of migrants. This has been criticised by human rights group for fundamentally altering the status of refugee’s. On the plus side, it should counter the claims that the EU means more migrants coming into the UK. But what is the headline in the Daily
stormtrooper Express, they filter down everything said over the last week to one sound-bite by Donald Tusk which they then take way out of context and spin it too suggest that somehow an agreement which sends back refugees will amount to an open door to them, WTF!
What this shows is that Cameron should never have called this referendum. It will not be fought on the issues. It is being fought on whatever outrageous lies and scaremongering that the fascist inclined tabloids can concoct.
A funny spoof from the Guardian website, which mocks the TV show location, location, location. It charts the all too common decisions faced by young millennials trying to find a flat in London. Consider that in London now, you’ll be paying about 3 times the cost per square metre for a house than in the rest of the country….and that’s in a rough area or out in Luton! In the centre of town £100 wouldn’t buy you enough space the size of an oyster card.
And as few can afford the hefty deposit that comes with buying in the capital, many are forced into renting, even when they can easily afford mortgage payments. Rents are now so high some are charging £74 a week for essentially a broom cupboard (many spend about £1,000+ a month, often +60% of take home pay on their rent). Ultimately I reckon rent controls are badly needed in London.
To the tower with him
The manager of slave driving sweatshop the firm Sports Direct,
conman businessman Mike Ashley has been ordered to appear before MP’s to explain himself. He’s been threatened with imprisonment within the Tower if he doesn’t comply. Apparently there is a rule within Parliament (which is technically a palace of the Queen) that do allow those who are found to be in contempt of Parliament to be imprisoned within Big Ben…although not on the clock face one assumes!
White House security doing its job
Gerry Adams was incensed at being refused entry to the White House on St Patrick’s day. Ya, what where the security guards thinking! Why would you refuse to let in a known bomb maker and IRA commander, currently under investigation over several “disappeared” people.
On the plus side, if Trump was at the event it could be a very easy way of solving lots of problems. Although Obama might have to explain why a small mount has suddenly appeared in the rose garden.
And last but by no means least, the quitting of the work and pensions secretary Ian Duncan Smith, as I was typing this up last night. He is making clear that his reasons for quitting are the failure of Osborne to suspend cuts to disability benefits.
Apparently he had been lobbying for cuts to benefits given to better off pensioners as an alternative to kicking people out of wheelchairs (personally, I’d rather cut neither, but I appreciate the point he was making that we should be cutting funding from those who can afford it, not those who can least afford it but are politically expendable).
Of course one has to wonder if friction over Europe and the referendum was also to blame. Certainly, the Tory party is increasingly at war with itself.