There seems to be a common misconception that free-market neoliberals must be firmly against the idea of a public information campaign on saving energy, on the basis that this is pure nanny-statism. In fairness, this is a view which has been propagated by our Prime Minister, who is said to be ‘ideologically opposed’ to the idea, and the Minister for Climate, who reminded Sky News that they are ‘not a nanny-state government.’
It’s worth quickly setting out here why they are wrong- and why Liz Truss’ announcement at PMQs this week that BEIS will be looking into a public information campaign after all is welcome news.
Information Campaigns are not a symptom of a nanny-state
It’s hardly a secret that the Adam Smith Institute is no fan of the nanny-state. Fundamentally, the nanny state materially impacts the ability of individuals to make choices. However, it is not nanny-statism to offer public advice. In fact, one of the central principles of a free market economy is that consumers should be fully informed in order to make decisions which are most appropriate to their individual needs.
2. It makes economic sense
Another criticism of the proposed information campaign is that £15 million is a waste of taxpayer’s money, which could be better spent during a cost of living crisis, a view exemplified here by Maria Caulfied. Whilst it is fair to question where taxpayer money is going, this misses a key point. Household energy bills are being subsidised by just under a third, at cost of approximately £150 billion. The public would not have to reduce their energy consumption by much in order for the information campaign to save the Government money. Anyway, compared to £150 billion, £15 million is hardly a small drop in the ocean.
3. It will help people to reduce their energy bills
There are surely few people who believe that Brits aren’t sensible enough to cut back down on their energy consumption. However, the Government’s communications around the energy price guarantee have been woeful. On her now infamous local radio round, Liz Truss asserted that no-one will be paying over £2,500 for their energy bills- when in fact the energy price guarantee is simply a price cap by another name, meaning that the typical household bill will come to around £2,500. At the end of September, polls suggested that two in five households thought that the guarantee prevented bills from going over £2,500 and the Government has done little work to correct this.
4. It is necessary to prevent blackouts
As many free-marketeers have been at pains to point out, one of the principal problems with Liz Truss’ energy subsidy scheme is that it has distorted the price signal. Freezing energy bills at a lower rate has created an artificial price signal for users, reducing the incentive to reduce consumption to a level optimal to prevent energy blackouts this winter. Moreover, considering that well-off households will be getting the largest subsidy and will be using the most energy, reminding them that, even if they are financially cushioned from the energy price rises, they still have a part to play in preventing blackouts is surely sensible.