Chris Skidmore’s “Mission Zero”, a 340 page review of progress toward zero carbon 2050 published today, Friday 13th, makes many good and important points, notably on nuclear, but it boils down to five words: “government, get on with it”. If you are not in government, that may be all you need to know but here are a few of its high and low lights.
The UK has fallen from leadership of nuclear electricity generation to back-marker due to government indecision. A nuclear plant is not a quick build. The Japanese lead the way today with a four year timeframe. Sizewell C holds the record for delay: 12 years since it was first proposed and it is still not approved. HM Treasury appears to be the prime blocker but all manner of other bodies have been encouraged to object. The Skidmore review also rightly points to the need for the Office of Nuclear Regulation and planning authorities to streamline and speed up their processes, the former in conjunction with other countries.
One of the best features of the review was the recognition of hydrogen as the main mechanism for storing electricity, i.e. supplementing the contribution of renewables when wind and/or sunshine are short.
Moving to the less good, the review is full of motherhood and apple pie but without specific numbers, such as what will produce how much electricity, or CO2, and when. An exception is “There is a clear and rising need for flexibility in the UK’s electricity system. Most studies suggest electricity demand by 2050 could be roughly double today’s level of total electricity demand.” The reference was a single EDF source whereas most studies expect electricity demand to increase five times, perhaps even seven times, by 2050. That is because electricity is 20% of energy now and will be almost 100% of energy in 2050. Not a difficult number to calculate.
Pages 292-306 list 129 recommendations, many being “roadmaps” and “pathways”. Some, e.g. para 120, are just gobbledigook: “Government should create a roadmap, by Autumn 2023, which details decision points for developing and deploying R&D and technologies that are critical for enabling the net zero pathway to 2050.” The review should have focussed on those that matter most.
It recognises the uncompetitive pricing of electricity but offers no solution: “McKinsey finds that about half of industrial fuel consumption can be electrified with technologies and processes available today. Despite electricity prices doubling since 2020 while gas prices increased fivefold, electricity prices remain significantly higher than gas prices.” Not to mention double those in the USA or France.
The review rightly points the finger at the sheer number of bodies involved being a cause of inaction. Its solution? More committees, bodies and “working together”. A much better solution would be to identify those few, largely financial, decisions that only government can make and then have government step away. Ofgem is a case in point. The complications brought in by Ofgem are part of the problem and regulators of this type were only supposed to be temporary, pending transition to full privatisation. The review takes us in the opposite direction. Para 197, for example, extends the involvement of government and Ofgem.
Para 92 states “Government to establish a new forum to coordinate across all regulators on the signals they are sending to businesses and investors across sectors about the net zero transition – including Ofwat, Ofgem, HSE, Environment Agency, Competition and Markets Authority, FCA, and the North Sea Transition Authority.” Ofgem should be abolished.
The main failing was the lack of any calculation for the electricity needs from wind, solar, other renewables, nuclear, fossil fuels (with CCUS) and net imports. If you do not know where the dartboard is, it is hard to hit at all, never mind getting a good score. Nor is there any calculation for the size of the baseload needed to complement the volatility of renewables. A net zero score for this review seems generous.
So here's another insane policy idea then
That the polluter pays is a fine idea. It does, however, require identifying who is the polluter:
Fossil fuel companies should be forced to “take back” the carbon dioxide emitted from their products, handing them direct responsibility for cleaning up the climate, a group of scientists has argued.
The principle that the producer of pollution should pay for its clean-up is established around the world, but has never been applied to the climate crisis.
The polluter here is the user of the fossil fuels, not the company. So, therefore, it should be the user of the fossil fuels dealing with, paying for, the pollution, not the company. QED.
In more detail, this is an attempt to make the company responsible for the costs of Scope 3 emissions. Scope 1 is what happens in the supply chain. Scope 2 in the production process. Scope 3 what users then use the product to do.
The claim being made here is that my driving down the road in a petrol car - as I do at times - is emissions by BP, or Shell, so therefore BP or Shell should be paying for those emissions. Which is obviously silly, for it is me making those emissions by driving down the road in my petrol car.
As ever, we can examine the logic of an argument by inverting it. Think of carbon credits. If it is the use of the product which is to be taxed, credited, then this means that Tesla is due all the carbon credits for the non-use of petrol by people who drive milk-floats. That’s insane. So, therefore so too is the idea of BP, or Shell, paying for emissions in use of fossil fuels.
We, us out here, are the users of fossil fuels. We are therefore the producers of the emissions.
Of course, opinions differ on the size, immediacy and even importance of carbon dioxide emissions. But it might be worth keeping the discussions of what to do next well away from any descent into true idiocy.
A tax raid on private schools would attack social mobility
Should independent schools be forced to charge VAT on their fees? And is it unfair that many of them have charitable status, meaning they can claim tax relief on donations? Well, judging by what some politicians are saying, removing these tax benefits would be a useful way to increase funding for state schools. That might sound like a good way of creating a fairer society.
In fact, a tax hike on independent schools would be damaging for social mobility, and profoundly unfair. The international super-rich will be able to send their children to Eton and Harrow regardless of the tax situation, but for average families, independent schools are already a massive strain. My own experience is not uncommon: my older brothers went to state primary schools in the early 1980s, but the local secondary school was what would now be deemed a failing school. Given the lack of school choice then, the only choice for my parents wanting us to get a good education was to send us private. That involved my father doing a full-time job in the public sector and then running a business in his evenings and weekends to just about afford the fees. It meant family holidays were in a tent and the supermarket shop had to be carefully budgeted – but it meant we all got a good education.
The current unfairness is not that private schools get a tax break, it’s that parents have to pay twice: first for the state-provided education they don’t receive (through taxes) and second for the private education. Adding VAT to fees wouldn’t matter much to the super-rich but would prevent aspirational but less well-off families from attending independent schools.
We’ve already seen the damaging effect of the politics of envy on private schools. Through the 1980s and 1990s, independent schools had a large number of entirely state-funded pupils (34,000 in 1997) made up of “bright children from modest backgrounds” funded through the government’s Assisted Places Scheme. According to a 2013 report on the scheme by the Sutton Trust, the resulting social mobility has been significant: the pupils “have continued their upward trajectory in professional and managerial occupations and are now in relatively secure and satisfying occupations with high levels of earnings. From this perspective, the Scheme is an unqualified success and arguably reveals meritocracy at work.”
The abolition of that scheme took this success story away, hindering access for low-income families to attend independent schools. The sector has tried hard to replace the social diversity that the Assisted Places School provided by offering quite extensive bursary programmes. These are significantly fuelled by the charitable status of private schools, which encourage alumni to make donations. Yet these bursaries, too, are under threat from the political rhetoric which demonises charitable status as somehow a tax perk for the rich, when it is actually used to increase social mobility.
Arguably the main problem with independent schools in Britain today is that they are already too expensive. In competing with now improving state schools – thanks to academy and free school status – they’ve invested heavily in having the best facilities, which has led to an increase in fees. But there is an alternative model, shown by the Independent Grammar School in Durham, which offers private education at a cost of just £3,600 a year. Here the model is academic rigour but without all the frills, an idea that surely has a lot of potential for growth.
Nonetheless, private schools provide high-quality education that parents like, and they help children who would otherwise struggle in what might be a disappointing local state school get a better education. So why use public policy to cut the number of lower-to-middle income families benefiting from them?
Pious hopes can be terribly misleading
The Public Accounts Committee bemoans how HMRC is failing in squeezing the last few pennies out of the populace:
The government has been criticised for failing to collect £42bn in unpaid tax from businesses and individuals amid concern over the strain on the public finances as the UK’s economy stands on the brink of recession.
The cross-party Commons public accounts committee (PAC) said that an “eye-watering” amount of tax was owed to HMRC, while also criticising tax collectors for lacking ambition to tackle fraud and error.
Several things need to be said about this. The most obvious being that this includes all bad debts. Which itself includes those who have gone bust - people and organisations of whatever type. That money is simply unrecoverable and so shouldn’t be included in any measure of what might be recoverable. We’d all be much better served by a measurement which excludes funds in bankruptcy.
A second point is that we don’t in fact want a system which gains every penny. Just as we don’t want a legal system which punishes every infraction. The aim is “tolerable administration” not the ability to only do precisely what government allows nor a forced insistence to do everything it dictates. Dictate being the correct root for a system which was exact and enforced to be so.
The third is this from the report itself:
For every £1 that HMRC spends on compliance activities, it recovers £18 in additional tax revenue.
Possibly, possibly, although we’d be willing to argue about that. However, while it’s fashionable these days to insist that neoclassical economics is all wet it is still true that we must take account of the Marginalist Revolution. That statement is of the average return to HMRC spending upon compliance. Which includes all that easy low hanging fruit which the system already recovers. This does not mean that the next £ spent will recover £18. For marginal matters - there are diminishing returns to any activity after all.
Finally, even that number claimed is not really the tax going uncollected. For in every assumption about how much a tax will raise there is that sub-assumption that some won’t pay it. For every scheme for dog licences there is a prior agreement and the knowledge that some tearaways just won’t bother. Insistences about income tax accept that some windows will still get cleaned for cash. Yes, having a simple and cheap system for corporate registration means that some will abuse this system - but what’s the overall benefit of having a simple and cheap system of corporate registration?
There are benefits to be had from a slightly leaky tax system as with so much else. What really matters here is the definition of “slightly” which is something the PAC doesn’t address at all - it should.
How the NHS limits access to healthcare
People are apparently concerned that the Prime Minister, Rishi Sunak, might have gone to a private GP. According to a nursing trade union leader, he needs “to come clean as a public servant”. Meanwhile Scotland’s First Minister, Nicola Sturgeon, says she has “never” used private healthcare and “wouldn’t encourage people to go private.”
Of course, parts of the NHS have always been delivered by the private sector, including NHS-branded GP practices and NHS-contracted pharmacies. Nonetheless, in the political sphere there is a view that going to an NHS-branded service (including those provided privately) is “fairer” than paying out of pocket or using health insurance. This, however, is a misnomer on two grounds.
Firstly, a significant group of users of private healthcare are self-employed people doing what might be called working class jobs. Plumbers, builders and white van drivers can’t afford to spend 18 months on an NHS waiting list when they are suffering in pain. While public sector office workers might be able to work from home or take lots of sick leave, if self-employed people stay in bed, they won’t be able to pay bills. The unfairness is surely that the NHS expects them to stumble on in pain, not that they have chosen to take out credit to get treated quickly. No one should feel morally compelled to wait for months for treatment when they have the resources and will to go private.
Secondly, the reason the private sector is able to deliver services quickly is because the incentives are different. NHS GPs, for example, are paid in large part by a lump sum per patient regardless of how many patients they see. Likewise, NHS accident and emergency services get the same amount regardless of the number of patients they see. So the incentives are structured so that providing a faster, more accessible service is actually the road to financial ruin. Even when NHS providers receive payment per treatment, such as for hip replacement surgery, the incentives are then destroyed because NHS commissioners (who control budgets) insist that hospitals who treat too many patients slow down. A huge NHS bureaucracy has now been employed in “referral management”, who slow down and try to reduce the number of patients who are allowed to go for hospital surgery.
In the private sector, where patients are paying out of pocket for the treatment they receive, doctors and healthcare providers are given the incentive to treat patients more quickly, drive efficiency, and offer services at the weekend and in the evenings. Because patients are paying, they can have the treatment, without a third party trying to ration them.
If the purpose of the NHS is to act as a rationing system, then the current set of incentives have a reasonably positive effect, placing some limits on rising costs. If, however, we assume that patients should get the treatment they need promptly, the incentives are seriously flawed.
Clear and obvious truths about the NHS
This starts well:
At last a glimmer of light on the NHS horizon. Labour’s shadow health secretary, Wes Streeting, clearly smarting from his brush with cancer two years ago, has realised that the problem with the NHS is not just cash but structure. Above all, it lies in the costs and delays of an archaic network of occupational demarcations seizing up surgeries and hospitals alike.
The sheer lumbering vastness of the NHS has sent it slithering down the league table of world health services.
One way of thinking about this is that we’ve simply not got the management techniques to run an organisation of 1.2 million people. This is beyond humanity’s ken, d’ye see? The other illustration being that we don’t know how to run, directly and in detail, 11 or 12% of an entire economy. GOSPLAN didn’t work and the same management style also doesn’t work on significant fractions of an economy.
So, yes. Even if we then go on to say that health care in the UK does need more money - not something we’re willing to agree to other than for the sake of this specific following argument - it is still true that we need to sort out that structure within which we’re to do that spending.
The only management technique we’ve got at such scales is the use of markets. No, this doesn’t mean the US health care system, that of France or Germany uses markets. Multiple suppliers, their activities coordinated by the use of prices. It’s entirely possible to retain, if this is desired, that principle of single payer - as some European health care systems do.
We’re also not insisting upon capitalism, only upon the use of markets. It’s not ownership that is the point here, it’s the system of deciding who does what to whom, when. That system that markets can and do coordinate and planning - clearly and obviously - does not.
Having laid out the problem then of course everything goes wrong:
Labour, says Streeting, would turn GP surgeries into health centres. Doctors would no longer rule the roost: GP “partners” now earn an average of £109,000 a year. Doctors would revert to being salaried NHS employees, working alongside nurses, therapists and technicians, and handling the vast majority of health cases that don’t require a hospital visit.
No, that is to increase the centralisation, to subject yet more of the system to that detailed and ineffective control. Employees are, obviously, more directed in their activities than independent contractors after all.
If we are to say that changing the NHS would make it better - which we insist is a glaringly obvious, umm, observation - then it would be a good idea to look around at other systems and pick up bits of those other systems which we think work better. Say, the Singapore system, which seems to produce better results at half the cost. Or, the Swedish, or Danish (both much more local) or the French (more competition among providers) or the German (more competition among financiers) or, or, or…..rather than coming up with home grown changes which will only make the diagnosed problem worse. Like sucking even more of the system into that centralised control as suggested here.
One final truth about the current system. It is often claimed that the NHS system - that lack of markets, that central direction - is more efficient than other management methods. It is also often claimed, usually by the same people, that the NHS is underfunded because it doesn’t receive the same resources as those other, more inefficient systems. Both cannot be true. If the NHS is more efficient in structure then it should cost fewer resources for the same output - because that’s what more efficient means. Therefore anyone arguing that the NHS should receive the same resources as other systems is, by definition, arguing that the NHS is not more efficient.
Therefore we should make it more efficient, shouldn’t we? Markets it is then.
An early entry for Chutzpah Of The Year Award
It’s entirely true that Sri Lanka’s economy is borked:
Some of the world’s most powerful hedge funds and other investors are holding up vital help for crisis-hit Sri Lanka by their hardline stance in debt-relief negotiations after the Asian country’s $51bn (£42bn) default last year, according to 182 economists and development experts from around the world.
In a statement released to the Guardian on Sunday, the group said extensive debt cancellation was needed to give the economy a chance of recovery and that Sri Lanka would be a test case of the willingness of the international community to tackle a looming global debt crisis.
Debts that cannot be paid will, of course, not be paid.
182 economists and development experts have called for debt cancellation for Sri Lanka to help it out of its current economic crisis. In a statement released today, the signatories – including Jayati Ghosh, Thomas Piketty, Dani Rodrik, Ravi Kanbur, Yannis Varoufakis and Ha-Joon Chang – call for debt cancellation by all external creditors and measures to stem the illicit outflow of capital from the country.
Dr. Gosh has been one of the leading purveyors of the economic policies which have led to Sri Lanka’s economy being borked.
As has been noted before insistences on green policies can have that effect. That immediate switch to organic farming was a crucial part of the disaster. No, really. Dr. Gosh being one of those who have so loudly insisted that Sri Lanka, as with everywhere else, must stop this neoliberal habit of importing things to increase efficiency. Like, say, fertiliser.
Some of those external creditors will be the usual pension funds and so on that are supposed to provide for us in our old age. Because that’s just how international capitalism works, capital is invested globally. So, the demand is that some portion of our pensions should be confiscated to pay for the policy mistakes promulgated by Dr. Gosh. This demand that we pay for it coming from Dr. Gosh.
A traditional definition of chutzpah is to claim orphan status in mitigation against charges of parricide. We think this rises to that standard. It’s early in the cycle but we do think this is s strong contender for the coveted Chutzpah of the Year Award.
Losses should not be socialised in this manner - your pension first Dr. Gosh, your pension first.
The nanny state we’re in
So now we know: the anti-smoking lobby wants a complete ban on cigarette sales. Wes Streeting, the Shadow Health Secretary, has voiced what the lobby wants, and says he is considering a complete ban on the sale of cigarettes. Meanwhile, Action on Smoking and Health (ASH) is demanding a “new Tobacco Control Plan” so that Britain can become “smokefree by 2030”.
Prohibition of alcohol was a disaster in America, and the War on Drugs around the world lined the pockets of criminals. Legislators are starting to understand that the criminalisation of cannabis has been bad for society. Some enlightened countries are legalising cannabis. For example, the cultivation and recreational use of cannabis is legal in Canada, while America is gradually legalising cannabis use state-by-state.
What connects the puritans who get upset at the notion of people enjoying themselves (whether with wine, cannabis and cigarettes) is that they don’t really believe in free choice. ASH, the lobby group, thinks that people smoke because they are oppressed by “inequalities”. In their world, “The more those around you smoke, the more likely you are to start smoking and the more difficult it is to quit, perpetuating these cycles, and transmitting inequalities across generations.”
In this view of the world, humans are weaklings to whom business and society inflicts its will through advertising, peer-pressure, exploitative offers and even the existence of products sold in plain packaging (except for graphic health warnings) hidden behind cupboards. The role for government, then, is first to “nudge” people to stop doing enjoyable things (because that sounds better than ban). But really the aim is to get to the point where outright bans are possible because, after all, if people were capable of choice they would stop making the “wrong” ones.
In fact, most people engage in “naughty” activities like drinking gin and smoking a cigarette because they enjoy it: they find it relaxing. They know you can have too much of a good thing and, in the case of tobacco, that there are clearly health risks. In a free country, people should have the freedom to take part in activities that affect themselves without having hectoring moralisers try to use the power of the state to prevent them.
Far from creating “new Tobacco Control Plan”, politicians should realise that they have already gone too far by preventing smoking rooms in pubs, and abandon the ludicrous, moralising “smokefree by 2030” agenda, which is an attack on people’s free choice and would just expand criminal activity.
Does anyone still teach - or perhaps learn - logic, reasoning?
A substantial part of the Enlightenment was that we should use logic and reason to divine public policy rather than the supposed claims of the divinity of your choice. It’s not obvious that this idea has stuck:
Despite having hired an ethnically diverse workforce that often reflected the population they served, Sainsbury’s store managers were, in most cases, all white men. “And it wasn’t just me that was concerned about it. Naturally, the executive management were concerned as well,” Tyler says.
It sparked a series of initiatives, including management development schemes, unconscious bias training and recruitment programmes, which also focused on senior leadership, resulting in Sainsbury’s appointing the first black woman – Jean Tomlin – to its board in 2013.
By the time he stepped down in 2019, Tyler felt they had made a difference. “It’s much easier for, say, a young woman from an ethnic minority arriving in one of our stores to see that it’s possible for her to get to the top today than it was then. And that’s really important, as far as I’m concerned.”
As with Gary Becker on taste discrimination. Not hiring talent - or not allowing talent to flourish - on spurious grounds like ethnicity, religion, gender, sexuality and so on is costly to an employer. Therefore the competition in the marketplace for access to talent will break down discrimination in hiring on the basis of ethnicity, religion, gender, sexuality and all the rest. In fact, so strong is this impulsion that if maintenance of such discrimination is desired - say, because the ruling class is obscenely racist - then it will be necessary to use the law to insist upon it. Thus Jim Crow, for that insistence on not being allowed to hire talent, wherever it is, is the only thing which will stop business from profiting from hiring talent.
We’re entirely fine with that work within the supermarket chain therefore. Obviously we are, it accords with our beliefs and you can’t gain greater proof than that, can you?
But then:
It is one of the reasons that Tyler, who now chairs the government-backed Parker review into ethnic diversity, has broadly welcomed new regulations that will, for the first time, force the UK’s roughly 1,100 publicly listed companies to show that they are meeting gender and ethnic diversity targets – or explain why they are falling behind.
This is where the logic and reason part come in. If we assume that the performance of Sainsbury’s is increased by that access to talent then we’ve no need for the insistence of the law that all do it.
As an aside, Sainsbury’s shareholders should be a little miffed that their former chairman is now whittling away at their competitive advantage by insisting everyone else adopt their winning policy.
But logic, reason: if hiring diversely increases profits then we’ve no need of a law to hire diversely because capitalism and markets - good old greed if you prefer - will lead to diverse hiring. The only possible justification for the law about hiring diversely is that it is not more profitable therefore there is no other impulse which will lead to it.
Do note something here. There could well be other reasons why we might want the law. That logical, reasoning, process does allow us to nibble away at an argument piece by piece. So this is about exactly that piece being presented.
If diversity increases profits then we need no law about it, if we do need a law about it then it cannot be true that the profit justification is valid. QED.
Our suspicion is that those proposing this argument know all of this. But it still acts as some vaguely convincing handwavey stuff that justifies what they already wish to do. Which is fine, obviously, folk get to do as they wish - but it’s not exactly a strong defence of those Enlightenment virtues of logic and reasoning, is it?
Extraordinarily bad logic in the steel industry
Or, perhaps, just extraordinarily bad logic being used to justify yet another hand out to the steel industry.
In general this is not a bad outline of what is going on. Blast furnaces are large, highly polluting - in the CO2 sense - methods of making virgin steel. Arc furnaces are a lower capital cost method of reutilising steel scrap. We like recycling but it’s not possible to recycle forever, impurities - called “tramp elements” - do accumulate.
So, we’ll always need some amount of virgin steel to be added into the system. If blast furnaces are out, what are we to do? There are answers, DRI and so on are alternatives to blast furnaces. As those old furnaces go to die - they do, takes decades, but they do - then replace them with the new technology.
All of that is fine, justified and sensible. Then comes the switch:
If the UK is to retain a steel industry while at the same time treading the path to industrial net zero, the blast furnaces as they are have to be retired.
Tata’s and Jingye’s demands for support from the government is linked to high energy prices and the carbon emissions penalty regimes that make UK steel production uncompetitive and prevent investment in new technologies.
Ah, no. DRI doesn’t have those emissions - doesn’t use coke for example - and so installing DRI means not paying the emissions penalty. This is rather the point of the emissions penalty, so that people will move over to the non-emittive technology. Whether we talk Stern - tax emissions now - or Nordhaus - make sure everyone knows we’ll tax future emissions - doesn’t matter. The entire point of the carbon tax, which is what this is, is that when the furnaces get replaced they’ll be with the new tech precisely and exactly so that it won’t pay the emissions penalty.
But what is the claim being made by the steel industry here? That they require subsidy to build anew with the cheaper tech. Which is absurd. We’re deliberately fining them for the use of the old tech, in order to make it more expensive relative to the new. To provide that impetus for the adoption of the new. Yet now they’re demanding a subsidy to reduce their own costs?
Closing the blast furnaces, fine, we want this to happen. That’s the very point of the emissions penalty. Subsidy to do so? No, not when we’re actively fining people into doing so.
The strategic roadmap is just fine. The demand for subsidy along the way - nope, they can go boil their heads.