Thursday 26 May 2022

Sunak's Package: Lots Bad - Anything Good? Updated

We may not have received full details yet, but here are a couple of immediate thoughts - to the negative.

  • Crass bad politics in the presentation of it:  why spend a week saying, oooh, all our instincts are against a windfall tax, that's no way to behave, that's a nasty leftie idea - and then say, oh, alright then, if you insist; how about £5 billion?   But we don't enjoy doing it, mind.  When you give something away, do it with good grace and get the full credit.
  • Oil & gas production isn't the only energy windfall sector:  but I haven't read anything about hitting the other really big windfall-winners, namely nukes, and windfarms / solar / biomass etc that are subsidised via ROCs rather than CfDs - which is the majority.  These guys - with costs that don't go up but sales prices that really do, and subsidy payments that carry on regardless (apart form the nukes) - have been making out like gangsters.  And why did they need subsidies in the first place?  Why, to make investing in renewables 'low risk'.  OK, so no windfall rewards, then ... surely?  Nobody, ever, should be getting windfalls on the back of public subsidy.
Anyone spot anything to get enthusiastic about?

Incidentally, it's still not clear to me Johnson is remotely seized with the horror that is to come next winter.  This was an opportunity for making some serious preparations.  If you're going to give large cash sums by way of rebates, now is the exact time to start priming the populace for what may be coming next.  Johnson's sole strategy is Micawber, but there ain't anything good gonna turn up before the next GE that I can see.  So he's destined to be permanently on the back foot: one of the worst things I can say about a politician, particularly one who's in power.

Open thread - go for it!  


UPDATE:  Channel 4 reckons he's coming back again shortly for another £3bn from "electricity companies" I trust this gets to the second point above.  Presumably it all points to the plan being rushed out to cover for the Gray report.  What a bloody shambles.


Don Cox said...

I see nothing in the general situation to be optimistic about. If by any chance the war in Ukraine dies down, that would be less negative, but it may well go on for years. It may get worse.

We can look forward to some nice pictures from the James Webb telescope, and there are likely to be one or two successful demonstrations of nuclear fusion in about 18 months from now.

The main thing we need in Britain is higher interest rates. They've been absurdly low for too long. Lower taxes would be good too. The government could reduce costs a bit by getting rid of all the diversity officers and similar fluff. They do seem to be at last making a start on unwinding EU regulations.


DJK said...

Johnson is just awful, as big a recruiter was for Labour as Corbyn was for the Cons. Sunak was supposed to be the sensible one but he seems just as clueless as the rest of the cabinet. Presumably Sunak's plan is to bugger off to California as soon as the next election is over, leaving somebody else to sort out the wreckage.

Matt said...

Nothing unexpected from BluLabour. Anyone who imagines they are the party of Thatcher is barking mad. I'd ask why should the government be paying peoples bills but:
* They already set a precedence with CV-19 furlough.
* Market for electricity is screwed by Ofgem and the dead hand of government regulation (and renewable subsidy).

I see that Mark Wadsworth thinks that price controls would be the answer. His logic seems to be that companies would just put up with making no money. The idea they might exit the market apparently doesn't occur to him!

Timbo614 said...

In case you missed it (which I think was made easy to do intentionally): The only positive for the oil/gas sector is that if they now invest 5 Billion in UK energy projects (not sure if they have to sustainable?) they will get 91% of their investment back as a rebate on the 5 Billion Tax.

dearieme said...

My own guide to politics is to ask "Would a socialist do that?"

If the answers is yes don't bloody do it.

Oh God, it's back to the 70s, with the added disadvantage that I don't own a rifle any more.

Anonymous said...

Oh God, it's back to the 70s, with the added disadvantage that I don't own a rifle any more.

Been saying that to my OH for the last few years ... then ABBA turn up.

What hell are we in?

As an aside from Faisal Islam at Davos:

"Top bankers acknowledging privately that they are now constrained from funding fossil fuels directly but are loaning money to private equity, who then make investments in rejected/ divested fossil fuels earning incredible returns."

Caeser Hēméra said...

If I'm reading it correctly, it's not the dumbest move.

- Government gets to say to voters "see, we're listening"

- Government gets to say to the likes of Shell "invest enough in the UK, and it works out about a tenth of the headline figure"

- Labour get to say "see, we're the real leaders" - which makes Labour feel good, moves away from Partygate and has minimal cut through to the voters.

- Press moves on from Partygate, which Labour also want to do now.

Two faced politics that might buy any adults in the government some time to come up with some real solutions for autumn.

Nick Drew said...

Timbo - yes, the details are going to be important: and per the Update at the foot of the post, they seem to have in mind to address my second point. Pathetic that it's been so rushed, they didn't have time to make it a complete package

Anonymous said...

".. before the next GE .."

Well that so called genius Sunak printed more in 2020 than ever before. And that idiot Johnson shut the country down for the sniffles.

With a record like that, should the government stand a cats chance in hell of being re-elected. Because, the Labour party could barely do worse.

Title of the graphic two thirds of the way down the page: "We have been increasing the amount of Quantitive Easing".

No shit Sherlock!

Welcome to the Lira zone.

Anonymous said...

I missed this peach from that link - "QE lowers the cost of borrowing throughout the economy including for the government."

So currently the base rate is being forced in .... which direction ?

Tories, utter f***&(* muppets!

jim said...

I can't think of anyone better to run the country than Johnson. Mainly because we are stuck in a very difficult place with no good options. So let Johnson destroy himself, save everyone else until something turns up.

One day fusion power might be viable otherwise we are stuck with a lot of fossil fuel and some renewable. So a 20 or 30 year hiatus at best. Until that time the energy companies will be blagging a tale of blue hydrogen, no harm done taking that money off them.

Meanwhile we might dust off Malthus and also Swift's 'A Modest Proposal'.

Anonymous said...

jim: "Meanwhile we might dust off Malthus .."

World Economic Forum has beat you to it.

Elby the Beserk said...

Anonymous said...
jim: "Meanwhile we might dust off Malthus .."

World Economic Forum has beat you to it.

10:19 am

Club of Rome, to be precise, way back... "The Limits to Growth" from 1972, with the very clear message that it is humans who are the problem. Some of us anyway...

Anonymous said...

"If by any chance the war in Ukraine dies down, that would be less negative, but it may well go on for years. It may get worse"

Making the war worse and keeping it going for years is official US and UK policy, to "weaken Russia". The fact that it's also impoverishing working people in the EU and UK is just an added bonus.

(£90 to fill up today!)

"one day fusion power might be viable"

It's been only 10 years away since the 1960s!

Anonymous said...

"Oil & gas production isn't the only energy windfall sector: "

So lets see, this bi-polar vichy administration ( implementing the instructions of the Neo Cons in Washington ) has just forced Shell and BP to divest themselves of $5Bn and $15Bn of productive assets respectively, driving the latter into a loss for this first quarter of $20Bn.

Tax that, you f%$£^%& !!

Bernard Looney - Looney by name, Looney by nature. Bernard, is busy turning BP from an energy company to a Subsidy farm.

Anonymous said...

"Tories, utter f***&(* muppets!"

Printing money a l'outrance has been a bipartisan policy for 25 years.

Raising them oh-so-slightly has been a bipartisan policy for maybe 3. But then "events, dear boy, events" intervene - like Covid and our insane Russia policy.

But that can always be made worse, as the calls to DO SOMETHING NOW mount.

Anonymous said...

"Printing money a l'outrance has been a bipartisan policy for 25 years."

That is true.

But that BoE graph the last three bars were from 2020 *alone*. That all belongs to the Tory party. And despite the neanderthals claiming Putin's price hike is responsible, that QE in 2020 is the direct cause of the UKs current rampant inflation.

The Tory party did this.

Anonymous said...

There is only one way to curb inflation. That is to raise interest rates, to stop "quantitative easing", and then to put it into reverse. This is what the US Fed is doing, albeit belatedly, and what the BOE should start doing now.

The Bank's refusal to raise interest rates last autumn was criminally irresponsible.

And the politicians need to get together again with our former acquaintance TINA.

Unfortunately, we have no Mrs Thatcher or Geoffrey Howe available, to put TINA into practice.

Anonymous said...

Anon: "That is to raise interest rates, to stop "quantitative easing", and then to put it into reverse."

That's what they should do.

Talk about the horns of a dilemma. They need to raise rates or inflation will destroy the economy (viz Rail unions demanding more pay, just imagine what's going to happen with inflation at 15%? ), but if they do raise rates it'll destroy the economy because everyone has loaded up on cheap debt over the last twenty years, effective negative interest rates ( taking into account inflation of 2-3% interest rates vs interest rate of 1% ).

If you've bought a bigger and bigger house because prices always go up. Good luck.

Oh! And meanwhile, MPs award themselve £2K pay rise ( for destroying the economy ). Muppets!

CityUnslicker said...

I am sure house prices will go down if we raise interest rates. They will also rise with 15% inflation, as real assets hold some value over financial assets.

Promise I have the answer and will write it up next week.

Anonymous said...

If proper monetary controls are introduced, the economy will temporarily contract, as is happening now in the US. It will not be "destroyed", but will find its own equilibrium between supply and demand, without being artificially pumped up by negative interest rates and money-printing.

Whereas mass inflation will undoubtedly destroy the economy, and people's lives with it. As Lenin himself said: "You wish to destroy capitalism? Debauch the currency!"

As for "everyone loaded up on cheap debt", in fact most mortgage deals are on fixed rates, and much government debt is also on a pre-set tariff. Those who are so "loaded" will have to adjust their outgoings accordingly.

As with the same situation in the late 1970's/early 1980's, some pain is inevitable. But the alternative is at best Argentina, and at worst Zimbabwe.

Don Cox said...

Inflation in Zimbabwe is now 131.7%:

That didn't stop the president from hiring an expensive private jet to get to Davos.


dearieme said...

"131.7%": per what? Week?

E-K said...

Anon at 6.11 Nothing wrong with buying a bigger and bigger house if you've paid for it. You get to live in it.


We're going to have to go through the full 70s cycle again until a Thatcher arrives. Even then I'm not sure that there's any family silver left to sell off this time.

What would I do ?

Well, I did say lockdown was a bad idea and would result in hardships unseen by many and to war. Well here we are.

The Governing class IS the problem. The ARE the cost. They ARE the malign force within this country which steals our wealth and drains our lifeblood and destroys the fabric of our civilisation hijacking woke causes to do so.

Viewed through that prism and you see the extent of our problems. You may find your solution but I'm fucked if I can see it.

Elby the Beserk said...

Well, look what Bunter's done now. He really needs to go before further damage takes place. His contempt for democracy country knows no bounds.

"Boris Johnson has been accused of changing the ministerial code to help “save his skin” ahead of a new Partygate inquiry that could publish more photos and subject him to a public grilling by MPs.

The prime minister faced a barrage of criticism after he amended the rules on Friday to make clear that ministers will not always be expected to resign for breaching the code of conduct. Under new sanctions, they could apologise or temporarily lose their pay instead."

E-K said...

"There is a handful of Tory MPs still pushing the Prime Minister to resign. He will not do so. If this group of people possess a moral compass, they themselves would resign from the Party."

Boris and Sunak ARE the problem.

Here is the full article and who can dispute it ?

"Yellow card territory" ??? The man is a menace. And he's made us a prime target of Russia.

Don Cox said...

@ dearieme:

131.7% per annum.

andrew said...

"The Governing class IS the problem. The ARE the cost. They ARE the malign force within this country which steals our wealth and drains our lifeblood and destroys the fabric of our civilisation hijacking woke causes to do so."


Someone coined the phrase 'citizens of nowhere' and indeed these people think that because they have an electric gate securing their home they dont live in the same country.

Anonymous said...

Viewed through that prism and you see the extent of our problems. You may find your solution but I'm fucked if I can see it.

Drain the swamp?

The rot set in with the Whigs.

Anonymous said...

Andrew: "The Governing class IS the problem. The ARE the cost. "

Yes. And we could start by abolishing salaried MPs and Lords. It's turned out to be one of the biggest errors in the last one hundred and twenty years. And a festering opportunity for backscratchers and freeloaders.

They should be given accommodation vouchers, redeemable in Travel lodge or the lower strata Hiltons and the like. ( On the other hand, given that they all ran away and hid during the COVID scamdemic, an MP only really needs an internet allowance. £100 per month for 1Gb internet access. After all, they've demonstrated that it can be done.

DJK said...

Sunak is the archetypal citizen or nowhere, or rather or multiple places: UK, California, East Africa, India, and the Seychelles (where his wife's money resides, I think). But Boris too: born in NY, school in Brussels. Boris's father has become French, which gives you an indication of the family's commitment to the UK.

Anonymous said...

RAF Airbus 400 leaves Rzeszow after a hardware delivery. I see Russian/DNR/LDR claims of hits on "NATO weapons stores" but they are all half way to the frontline. Are the RU not capable of interdicting them between the frontier and Lvov/Lemberg?

Ryanair run regular services Luton/Rzeszow (£39!), sometimes coinciding with arms arrivals. Be interesting to do some planespotting, though the prospect of eating pickled cabbage and sour cream in a Polish jail doesn't appeal.

E-K said...

Anonymous @ 8.12

I understand that discreet supply happens. I've no real objection but feel it's prolonging the inevitable.

What I do object to, however, is Boris's showboating.

Toddler haircut, toddler behaviour.

Anonymous said...

Boris needs distractions (and to stay onside with US who are completely in charge of "Western" responses). I agree it's prolonging the agony for Ukraine.

We don't execute murderers, but we are happy to prolong a war, and indeed to kill innocents in Serbia/Iraq/Syria/Libya when we bomb, as always happens in war.

OK, we've seen Mariupol - but Fallujah was a LOT worse.

And don't forget what we sell the Saudis which they then drop on poor old Yemen.

Anonymous said...

Another Kalitta Air 747 arrives at Rzeszow from NYC.

Anonymous said...

Today's UK visitor is a Brit Typhoon, doing lots of circles round the Rzeszow airport.

Anonymous said...

Plus one of these, flown in from Sweden. Fast business jets as ELINT platforms seems to be a thing, I've seen Beechcraft stuff too.

Timbo614 said...

@ND Slightly off topic but I read of discussions to reopen the Rough gas storage facility with a Govt. subsidy of £1 Bln! What are the logistics/pragmatics? Any chance of it actually happening or does 1 Bln sort it?

Anonymous said...

Timbo, they seem to be keeping the coal stations open as well as trying to get an extra year out of Hinkley Point. Now if only we could reopen a couple of mines and approve that one near Whitehaven...

Six million homes could face power cuts this winter if the Russia standoff escalates, ministers have been warned. The grim picture is painted in a 'reasonable worst case scenario' prepared for the government. It predicts major gas shortages at the turn of the year if Russia cuts off more supplies to the EU, with plans drawn up to ration electricity if the situation deteriorates. According to the details seen by The Times, limits could need to be imposed on industrial use of gas, including on gas-fired power stations.

I bet Russia are praying for a freezing winter. Will our elites want to poke the Bear even at the cost of dead pensioners? Don't answer that!

Anonymous said...

"Will our elites want to poke the Bear even at the cost of dead pensioners? "

The Guardian commentariat as one say "let Granny die of cold, it's worth it to stop Putler and anyway we can blame her death on Boris".

Elby the Beserk said...

And whilst this has all been going on. Johnson has made it clear they intend to hand over health to the WHO.

"Government responded
This response was given on 27 May 2022

To protect lives, the economy and future generations from future pandemics, the UK government supports a new legally-binding instrument to strengthen pandemic prevention, preparedness and response."