One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That's a fair point.
The real unfairness is that the standing charge has been used to recoup the cost of bailing out the failed energy suppliers. They were the suppliers who cherrypicked creditworthy customers for uneconomically low tariffs. So poorer customers were excluded from these lower tariffs and are now paying extra because of them.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Just hungover after the Starmer pub drowning of sorrows.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
Yes, different businesses have different ways to extract as much cash as possible. At the moment our consumer energy market does this by exploiting the universal need for a grid connection and charging low users of energy the most.
It’s a choice. The government should intervene given we want to encourage people to get solar panels or insulate their homes.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
The electricity grid is the critical national infrastructure. Everything depends on it - hospitals, businesses, schools, homes. Modern life. If the state cannot maintain that from general taxation then we may as well just all pack up and go home.
Epic day yesterday with Burnham sacking Starmer's loyalists and replacing them with excellent appointments not least John Healey but also Streeting in defence, Mahmood remaining at home, sidelining Miliband to Foreign Secretary, and ending Phillipson's time in Education
His cut in VAT is good politics and if I was a Labour supporter I would be very encouraged going forward
Certainly Burnham has stamped his authority on his government and whilst he has many problems ahead Healey should at least reassure the bond markets
He should have announced the VAT cut yesterday instead of going on about street sleepers, something that nobody is bothered about.
I don't think people are overly bothered about the street sleepers themselves but, on a night out, they don't like the way street sleepers make town centres look untidy.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
Given that Andy isn’t going to change what SKS said and Iran is a mess of Trumps own creation - I can’t see Andy allowing bases in the UK to be used. So Trump is going to be unhappy
Reality is - the US isn’t a country we can deal with honestly anymore
Yes, My American friends keep saying that Trump won't last forever, and while that may be true, the fact is that the American people seem to have voted for a criminal cretin twice, so the trust that Americans could- in general- be relied on is totally gone. We will rearm, but from now one, that will be at least in part because we need to defend ourselves against the Americans as much as the Russians or the Chinese or the Indians.
Trump will be remembered as a catastrophic president. Though the really bad things probably won't start to happen until after he is dead.
Trump is running up a massive deficit, with the bills all coming in after he leaves office. It is the Wile E Coyote approach to economics and politics.
It's been the standard GOP approach since Reagan. But Trump has taken it to extremes, as there's no one in Congress to constrain him.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Just hungover after the Starmer pub drowning of sorrows.
As, presumably was the unnamed Labour MP quoted on Newsnight as threatening that Burnham "will reap what he has sown" after the purge of the Starmerites....
Given that Andy isn’t going to change what SKS said and Iran is a mess of Trumps own creation - I can’t see Andy allowing bases in the UK to be used. So Trump is going to be unhappy
Reality is - the US isn’t a country we can deal with honestly anymore
Yes, My American friends keep saying that Trump won't last forever, and while that may be true, the fact is that the American people seem to have voted for a criminal cretin twice, so the trust that Americans could- in general- be relied on is totally gone. We will rearm, but from now one, that will be at least in part because we need to defend ourselves against the Americans as much as the Russians or the Chinese or the Indians.
Trump will be remembered as a catastrophic president. Though the really bad things probably won't start to happen until after he is dead.
That I think is fair from both. All UK PMs have pursued similar lines with the Ukraine War.
Whilst I see different lines left / right on attitude to the Israel/USA war on Iran, with Kemi being more supportive of the USA (unless her view has changed), and Farage's head being where it normally is, that is not dominant at least for the current Parliament.
But the right has a tension in the future for how to recast their enthusiasm for the USA as somehow being the future, when it is on a journey into the past, and has demonstrated that its democracy is fragile and vulnerable, never mind if Trump's regime's White Nationalist values continue to play out.
It is quite unpredictable where we will be in 2029. I think there is a decent likelihood that Reform will be in a worse place than now, dependent on about 17 different things. The biggest problem for the Conservatives is what it always was - what happens if the Labour Government succeeds; then Kemi is left floating in space shouting about woke. But that needs the Govt to get a handle on immigration, and our culture to begin to turn away from having fear as its dominant value.
As UK-in-Europe by geography or politics we have to be able deal with potential options "stunted still-democratic USA" or "imperial USA wanting its sphere of influence and Europe made irrelevant". Plus that Trump's National Security policy is now to interfere in European politics to destabilise and drive in the political far right to mirror his own regime's politics.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That's a fair point.
The real unfairness is that the standing charge has been used to recoup the cost of bailing out the failed energy suppliers. They were the suppliers who cherrypicked creditworthy customers for uneconomically low tariffs. So poorer customers were excluded from these lower tariffs and are now paying extra because of them.
I note I was with "Zebra Power" in 2019 before the whole market went wrong. Bulb before that.
Given that Andy isn’t going to change what SKS said and Iran is a mess of Trumps own creation - I can’t see Andy allowing bases in the UK to be used. So Trump is going to be unhappy
Reality is - the US isn’t a country we can deal with honestly anymore
Yes, My American friends keep saying that Trump won't last forever, and while that may be true, the fact is that the American people seem to have voted for a criminal cretin twice, so the trust that Americans could- in general- be relied on is totally gone. We will rearm, but from now one, that will be at least in part because we need to defend ourselves against the Americans as much as the Russians or the Chinese or the Indians.
Trump will be remembered as a catastrophic president. Though the really bad things probably won't start to happen until after he is dead.
Trump is running up a massive deficit, with the bills all coming in after he leaves office. It is the Wile E Coyote approach to economics and politics.
It's been the standard GOP approach since Reagan. But Trump has taken it to extremes, as there's no one in Congress to constrain him.
And, unlike in the UK where the Tories' lack of financial prudence got a lot of scrutiny including from the mostly right leaning media, in the US the partisan nature of the media and the lack of challenge within Congress enables the GOP to get away with its borrow-and-spend addiction time after time.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
The electricity grid is the critical national infrastructure. Everything depends on it - hospitals, businesses, schools, homes. Modern life. If the state cannot maintain that from general taxation then we may as well just all pack up and go home.
It’s owned and maintained by private companies.
Equally
1) the users should be paying for it rather than the general public
2) as we see all the time Governments change projects for short term benefits - private companies when overseen correctly (I.e. not Ofwat) are a decent way of providing nationwide services
Epic day yesterday with Burnham sacking Starmer's loyalists and replacing them with excellent appointments not least John Healey but also Streeting in defence, Mahmood remaining at home, sidelining Miliband to Foreign Secretary, and ending Phillipson's time in Education
His cut in VAT is good politics and if I was a Labour supporter I would be very encouraged going forward
Certainly Burnham has stamped his authority on his government and whilst he has many problems ahead Healey should at least reassure the bond markets
He should have announced the VAT cut yesterday instead of going on about street sleepers, something that nobody is bothered about.
However street sleepers is something Burnham cares about clearly, and if he manages to improve the situation, good luck to him.
Most prime ministers don't achieve anything very much. At best they stem the rot, hold the fort, muddle through, and at worst they just add to the confusion. A PM saying, I did that and it was good, is a rare thing.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
I'm moving from London to Somerset in September, and plan to become a south west nationalist. I'm already offended by this government's make-up. Bet they will put up tax on cider and destroy my acquired identity.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
AFAIK the standing charges pay for the infrastructure and are not owned by the so-called electricity companies. So cutting these charges will undermine the economics of upgrading the grid for net zero. The only tools the government has is VAT or regulation. See Water.
Governing is a bit more difficult that getting positive media stories.
Standing charges pay (in theory, though I think companies can do it as they like?) for all the fixed costs, so infrastructure indeed (although do the retail companies actually pay for that per customer or as part of wholesale electricity costs?) but also billing and account management and debt chasing overheads.
Other companies wrap those fixed costs into item margins. I don't have a to pay a standing charge to shop at Tesco! It can be done. Very low users of energy could be loss-making for companies, but then if I go and buy one loaf of bread at Tesco and use a manned till then I doubt the margin on that item covers the full costs to Tesco of making that loaf available to me (checkout staff, shelf stacking card charges or cash costs). As noted elsewhere, there used to be standing-charge free tariffs - I had one!
At least cutting the electricity price (I hadn't realised electricity only) is a step in the right direction.
So, the cut in VAT is temporary, currently for 6 months. It is going to cost about £850m. It is supposedly paid for by giving up on digital ID that was costed at £1.8bn over 3 years ( let’s ignore the fact it was supposed to save money over the medium term). Let’s also ignore that £1.8bn over 3 years is £600m a year, not £850m. There is no actual budget for the £1.8bn. The cost (inevitably) is spread around multiple departments who were going to have to implement the digital ID system in their portals etc. So which departmental budgets are going to be cut to reflect this saving and cover the cost of the VAT cut? As a starting point this is really suboptimal. It shows a willingness to play fast and loose with our accounts in a way that is going to alarm the bond market. It increases the apprehension that Healey has been promoted beyond his competence. These numbers are small, this is nothing like Truss’s blank cheque for our gas. But it’s also a red flag. On day one.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
Or move to more dynamic pricing as the norm.
ETA: Our situation isn't that different. £10/month or so at most for electricity in the summer. If it cost more in winter then we'd get a battery (we don't have one yet) for time shifting the available solar and, particularly, for time shifting electricity purchase (cheap times) to use. Maybe the way is to have standing charge free tariffs for those who want, but they also have dynamic pricing.
So, the cut in VAT is temporary, currently for 6 months. It is going to cost about £850m. It is supposedly paid for by giving up on digital ID that was costed at £1.8bn over 3 years ( let’s ignore the fact it was supposed to save money over the medium term). Let’s also ignore that £1.8bn over 3 years is £600m a year, not £850m. There is no actual budget for the £1.8bn. The cost (inevitably) is spread around multiple departments who were going to have to implement the digital ID system in their portals etc. So which departmental budgets are going to be cut to reflect this saving and cover the cost of the VAT cut? As a starting point this is really suboptimal. It shows a willingness to play fast and loose with our accounts in a way that is going to alarm the bond market. It increases the apprehension that Healey has been promoted beyond his competence. These numbers are small, this is nothing like Truss’s blank cheque for our gas. But it’s also a red flag. On day one.
Expect more of this, and then big tax rises to come.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
I'm moving from London to Somerset in September, and plan to become a south west nationalist. I'm already offended by this government's make-up. Bet they will put up tax on cider and destroy my acquired identity.
Your user name on PB's new commenting system will be ManOfWestCountry ?
Epic day yesterday with Burnham sacking Starmer's loyalists and replacing them with excellent appointments not least John Healey but also Streeting in defence, Mahmood remaining at home, sidelining Miliband to Foreign Secretary, and ending Phillipson's time in Education
His cut in VAT is good politics and if I was a Labour supporter I would be very encouraged going forward
Certainly Burnham has stamped his authority on his government and whilst he has many problems ahead Healey should at least reassure the bond markets
He should have announced the VAT cut yesterday instead of going on about street sleepers, something that nobody is bothered about.
Depends on how many there are in your locality, I suppose. Street sleepers bother me quite a lot. I'd like to think everyone had a roof over their heads.
Given that Andy isn’t going to change what SKS said and Iran is a mess of Trumps own creation - I can’t see Andy allowing bases in the UK to be used. So Trump is going to be unhappy
Reality is - the US isn’t a country we can deal with honestly anymore
Yes, My American friends keep saying that Trump won't last forever, and while that may be true, the fact is that the American people seem to have voted for a criminal cretin twice, so the trust that Americans could- in general- be relied on is totally gone. We will rearm, but from now one, that will be at least in part because we need to defend ourselves against the Americans as much as the Russians or the Chinese or the Indians.
Trump will be remembered as a catastrophic president. Though the really bad things probably won't start to happen until after he is dead.
Trump is running up a massive deficit, with the bills all coming in after he leaves office. It is the Wile E Coyote approach to economics and politics.
He's going to leave the US with many bills to pay, financial and otherwise.
Epic day yesterday with Burnham sacking Starmer's loyalists and replacing them with excellent appointments not least John Healey but also Streeting in defence, Mahmood remaining at home, sidelining Miliband to Foreign Secretary, and ending Phillipson's time in Education
His cut in VAT is good politics and if I was a Labour supporter I would be very encouraged going forward
Certainly Burnham has stamped his authority on his government and whilst he has many problems ahead Healey should at least reassure the bond markets
He should have announced the VAT cut yesterday instead of going on about street sleepers, something that nobody is bothered about.
However street sleepers is something Burnham cares about clearly, and if he manages to improve the situation, good luck to him.
Most prime ministers don't achieve anything very much. At best they stem the rot, hold the fort, muddle through, and at worst they just add to the confusion. A PM saying, I did that and it was good, is a rare thing.
I agree that if Burnham does manage to improve the street sleeping situation that can only be a good thing, however I believe the numbers have risen in Manchester over the last 2-3 years? It's a bit of an eye opener to see the boosting of 'Manchesterism' when Manchester pretty much matches Glasgow on most metrics. The chances of the local and state media praising Glasgow rather than screeching about potholes and junkies is precisely zero.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
So, the cut in VAT is temporary, currently for 6 months. It is going to cost about £850m. It is supposedly paid for by giving up on digital ID that was costed at £1.8bn over 3 years ( let’s ignore the fact it was supposed to save money over the medium term). Let’s also ignore that £1.8bn over 3 years is £600m a year, not £850m. There is no actual budget for the £1.8bn. The cost (inevitably) is spread around multiple departments who were going to have to implement the digital ID system in their portals etc. So which departmental budgets are going to be cut to reflect this saving and cover the cost of the VAT cut? As a starting point this is really suboptimal. It shows a willingness to play fast and loose with our accounts in a way that is going to alarm the bond market. It increases the apprehension that Healey has been promoted beyond his competence. These numbers are small, this is nothing like Truss’s blank cheque for our gas. But it’s also a red flag. On day one.
In reality £850m in less revenue, spread amongst the population who will inevitably spend it on other stuff generating additional VAT and other taxes elsewhere, is pretty much a rounding error.
We absolutely need to give governments space to do very minor things like this without converting it into a debate about the debt and deficit structure. That doesn't mean those don't need to be addressed, but one is short term tactics the other is a medium to long term plan, the overlap is negligible and massively overplayed in modern political commentary.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
Or move to more dynamic pricing as the norm.
ETA: Our situation isn't that different. £10/month or so at most for electricity in the summer. If it cost more in winter then we'd get a battery (we don't have one yet) for time shifting the available solar and, particularly, for time shifting electricity purchase (cheap times) to use. Maybe the way is to have standing charge free tariffs for those who want, but they also have dynamic pricing.
Sorry but I really don’t see what you are after - if you want to pull any energy from the grid at any point you need to pay a fee to access that grid.
Now you may not like the cost of that access but I believe it’s perfectly valid for a fee to be charged to maintain that connection
Good morning one and all! Solar power wouldn't be doing as well, locally, today as it has been.
To throw a tiny spanner towards, at any rate the works, was not VAT on electricity supplies introduced because it was EU policy? And if so, will removing it make rejoining just a teeny bit more difficult. I must admit I haven't picked up on our new PM's view on the EU, but the traditional Left Wing view of the EU was that there were against it. That was why we had the 1975 Referendum which, IIRC, gave a 2:1 majority in favour on a 66% or thereabouts poll.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Just hungover after the Starmer pub drowning of sorrows.
As, presumably was the unnamed Labour MP quoted on Newsnight as threatening that Burnham "will reap what he has sown" after the purge of the Starmerites....
It all feels a bit back to the past to me and I'm not sure whether that's a good or bad thing, as yet. More optimistically, a reset, perhaps, after following the wrong path for a year.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
Something else missing is that they can’t be changed by us, only in agreement with 26 other countries who all have their own priorities.
Given that Andy isn’t going to change what SKS said and Iran is a mess of Trumps own creation - I can’t see Andy allowing bases in the UK to be used. So Trump is going to be unhappy
Reality is - the US isn’t a country we can deal with honestly anymore
Yes, My American friends keep saying that Trump won't last forever, and while that may be true, the fact is that the American people seem to have voted for a criminal cretin twice, so the trust that Americans could- in general- be relied on is totally gone. We will rearm, but from now one, that will be at least in part because we need to defend ourselves against the Americans as much as the Russians or the Chinese or the Indians.
Trump will be remembered as a catastrophic president. Though the really bad things probably won't start to happen until after he is dead.
That I think is fair from both. All UK PMs have pursued similar lines with the Ukraine War.
Whilst I see different lines left / right on attitude to the Israel/USA war on Iran, with Kemi being more supportive of the USA (unless her view has changed), and Farage's head being where it normally is, that is not dominant at least for the current Parliament.
But the right has a tension in the future for how to recast their enthusiasm for the USA as somehow being the future, when it is on a journey into the past, and has demonstrated that its democracy is fragile and vulnerable, never mind if Trump's regime's White Nationalist values continue to play out.
It is quite unpredictable where we will be in 2029. I think there is a decent likelihood that Reform will be in a worse place than now, dependent on about 17 different things. The biggest problem for the Conservatives is what it always was - what happens if the Labour Government succeeds; then Kemi is left floating in space shouting about woke. But that needs the Govt to get a handle on immigration, and our culture to begin to turn away from having fear as its dominant value.
As UK-in-Europe by geography or politics we have to be able deal with potential options "stunted still-democratic USA" or "imperial USA wanting its sphere of influence and Europe made irrelevant". Plus that Trump's National Security policy is now to interfere in European politics to destabilise and drive in the political far right to mirror his own regime's politics.
Kemi Badenoch is probably fortunate that yesterday was all about the new government so people missed this demented airing in the Sun:
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
I'm with you on about half of that, but it is all tricky balances - wit Governments wanting as much as possible paid for by not-Governments. The grid is a social cost, but with lots of stakeholders and angles. And we are now in an generational renewal since most of it was built in say 1950-1980 and society has changed, as have locations of supply.
If your parents have invested in their house, then they should benefit, surely. Otherwise we are back into "I expect the Government to pay for my solar". And in practice it is a mixture of the two.
And self-generation reduces the need for local grid upgrades - something that on occasions can happen to self builders who add the last straw that breaks the camel's back, when they may get "you will have to pay for a substation upgrade", or sometimes a connection. There is a whole topic area about minimising these costs.
A similar effect can also happen - or perhaps used to happen - to people installing solar, especially larger arrays. Before I could do my 10k array back in 2016 I had to have the increase over the automatically permitted 4k pre-approved and checked.
The same happens with housing estates and road junctions - if you are the one who pushes it over the modelled limit, you are in for costs. It's more complex in that I think they look ahead, but there is always something of a race to avoid picking up the extra "social" overheads.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
Or move to more dynamic pricing as the norm.
ETA: Our situation isn't that different. £10/month or so at most for electricity in the summer. If it cost more in winter then we'd get a battery (we don't have one yet) for time shifting the available solar and, particularly, for time shifting electricity purchase (cheap times) to use. Maybe the way is to have standing charge free tariffs for those who want, but they also have dynamic pricing.
Dynamic pricing doesn't really solve the problem, because the costs for supplying my parents isn't just the fuel for the gas turbine that's supplying them. It's the cost of having that gas turbine there sat idle 300 days a year, ready to supply the peak demand. It's the cost of sizing the interconnectors from that gas turbine to take the peak demand to their local distribution network. It's the cost of maintaining the 11KV and 415V local distribution networks to get electricity to their village and house, all to deliver 100kwh a year.
Dynamic pricing will reflect the cost of putting the additional generation on load to supply them. It won't reflect the system cost of having the capacity to supply them sat around all year, waiting for the few hours when it's wanted.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
Yes, different businesses have different ways to extract as much cash as possible. At the moment our consumer energy market does this by exploiting the universal need for a grid connection and charging low users of energy the most.
It’s a choice. The government should intervene given we want to encourage people to get solar panels or insulate their homes.
I believe that Ed Davey was critical of this policy because most of the savings will go to the richest people in the largest houses with the biggest bills. He was right. Focusing the same money ( if we have it) on standing charges would have done much more to help those genuinely in need. It’s almost as if the gesture was more important than the result.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
Given that Andy isn’t going to change what SKS said and Iran is a mess of Trumps own creation - I can’t see Andy allowing bases in the UK to be used. So Trump is going to be unhappy
Reality is - the US isn’t a country we can deal with honestly anymore
Yes, My American friends keep saying that Trump won't last forever, and while that may be true, the fact is that the American people seem to have voted for a criminal cretin twice, so the trust that Americans could- in general- be relied on is totally gone. We will rearm, but from now one, that will be at least in part because we need to defend ourselves against the Americans as much as the Russians or the Chinese or the Indians.
Trump will be remembered as a catastrophic president. Though the really bad things probably won't start to happen until after he is dead.
That I think is fair from both. All UK PMs have pursued similar lines with the Ukraine War.
Whilst I see different lines left / right on attitude to the Israel/USA war on Iran, with Kemi being more supportive of the USA (unless her view has changed), and Farage's head being where it normally is, that is not dominant at least for the current Parliament.
But the right has a tension in the future for how to recast their enthusiasm for the USA as somehow being the future, when it is on a journey into the past, and has demonstrated that its democracy is fragile and vulnerable, never mind if Trump's regime's White Nationalist values continue to play out.
It is quite unpredictable where we will be in 2029. I think there is a decent likelihood that Reform will be in a worse place than now, dependent on about 17 different things. The biggest problem for the Conservatives is what it always was - what happens if the Labour Government succeeds; then Kemi is left floating in space shouting about woke. But that needs the Govt to get a handle on immigration, and our culture to begin to turn away from having fear as its dominant value.
As UK-in-Europe by geography or politics we have to be able deal with potential options "stunted still-democratic USA" or "imperial USA wanting its sphere of influence and Europe made irrelevant". Plus that Trump's National Security policy is now to interfere in European politics to destabilise and drive in the political far right to mirror his own regime's politics.
The point is that Trump's short run power rests on intimidation and threats, especially on tariffs. It is pretty easy to win, when you cheat and tear up the rule book and do not give a tuppenny damn about what is legal or illegal.
Yet his policies in the medium term are guaranteed to weaken US power- for example low immigration means no Musks or Sergei Brins in the future (admittedly they are pretty problematic in the present, but they have undoubtedly had a soft power pull), and the US economy, for all its historic strength is not indestructible- especially if there is no longer any good will towards a country that has replaced intelligence with arrogance.
An authoritarian United States offers little that a China does not. A Democratic Europe, however, wins the soft power race hands down- which is part of why the US explicitly intends to weaken European democracy. The outrageous behaviour of the Traitor President towards Canada provides a terrible warning about where depending on the US can lead. So, Burnham makes nice to Trump, but we all know that his fingers are crossed... and they should be. We owe the United States nothing now.
So, the cut in VAT is temporary, currently for 6 months. It is going to cost about £850m. It is supposedly paid for by giving up on digital ID that was costed at £1.8bn over 3 years ( let’s ignore the fact it was supposed to save money over the medium term). Let’s also ignore that £1.8bn over 3 years is £600m a year, not £850m. There is no actual budget for the £1.8bn. The cost (inevitably) is spread around multiple departments who were going to have to implement the digital ID system in their portals etc. So which departmental budgets are going to be cut to reflect this saving and cover the cost of the VAT cut? As a starting point this is really suboptimal. It shows a willingness to play fast and loose with our accounts in a way that is going to alarm the bond market. It increases the apprehension that Healey has been promoted beyond his competence. These numbers are small, this is nothing like Truss’s blank cheque for our gas. But it’s also a red flag. On day one.
In reality £850m in less revenue, spread amongst the population who will inevitably spend it on other stuff generating additional VAT and other taxes elsewhere, is pretty much a rounding error.
We absolutely need to give governments space to do very minor things like this without converting it into a debate about the debt and deficit structure. That doesn't mean those don't need to be addressed, but one is short term tactics the other is a medium to long term plan, the overlap is negligible and massively overplayed in modern political commentary.
That is why I made the point that the numbers were small. To put it in perspective the cost is only a small fraction of the difference in borrowing last month. I accept that and I don’t want a government paralysed by spending targets.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
Yes, different businesses have different ways to extract as much cash as possible. At the moment our consumer energy market does this by exploiting the universal need for a grid connection and charging low users of energy the most.
It’s a choice. The government should intervene given we want to encourage people to get solar panels or insulate their homes.
I believe that Ed Davey was critical of this policy because most of the savings will go to the richest people in the largest houses with the biggest bills. He was right. Focusing the same money ( if we have it) on standing charges would have done much more to help those genuinely in need. It’s almost as if the gesture was more important than the result.
It’s on both the standing order and the electricity itself.
And it’s the only tool available at no notice , standing orders have a lot of things hidden in them including a large amount go cover paying bills not paid by other people
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
Stolen from twitter, hat tip Lewis Goodall
Regional breakdown of full cabinet
North West: 7 Yorkshire: 4 North East: 2 West Mids: 2 London: 2 East Mids: 1 Wales: 2 South: 2 Scotland: 1
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
Epic day yesterday with Burnham sacking Starmer's loyalists and replacing them with excellent appointments not least John Healey but also Streeting in defence, Mahmood remaining at home, sidelining Miliband to Foreign Secretary, and ending Phillipson's time in Education
His cut in VAT is good politics and if I was a Labour supporter I would be very encouraged going forward
Certainly Burnham has stamped his authority on his government and whilst he has many problems ahead Healey should at least reassure the bond markets
He should have announced the VAT cut yesterday instead of going on about street sleepers, something that nobody is bothered about.
However street sleepers is something Burnham cares about clearly, and if he manages to improve the situation, good luck to him.
Most prime ministers don't achieve anything very much. At best they stem the rot, hold the fort, muddle through, and at worst they just add to the confusion. A PM saying, I did that and it was good, is a rare thing.
I agree that if Burnham does manage to improve the street sleeping situation that can only be a good thing, however I believe the numbers have risen in Manchester over the last 2-3 years? It's a bit of an eye opener to see the boosting of 'Manchesterism' when Manchester pretty much matches Glasgow on most metrics. The chances of the local and state media praising Glasgow rather than screeching about potholes and junkies is precisely zero.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
I'm with you on about half of that, but it is all tricky balances - wit Governments wanting as much as possible paid for by not-Governments. The grid is a social cost, but with lots of stakeholders and angles. And we are now in an generational renewal since most of it was built in say 1950-1980 and society has changed, as have locations of supply.
If your parents have invested in their house, then they should benefit, surely. Otherwise we are back into "I expect the Government to pay for my solar". And in practice it is a mixture of the two.
And self-generation reduces the need for local grid upgrades - something that on occasions can happen to self builders who add the last straw that breaks the camel's back, when they may get "you will have to pay for a substation upgrade", or sometimes a connection. There is a whole topic area about minimising these costs.
A similar effect can also happen - or perhaps used to happen - to people installing solar, especially larger arrays. Before I could do my 10k array back in 2016 I had to have the increase over the automatically permitted 4k pre-approved and checked.
The same happens with housing estates and road junctions - if you are the one who pushes it over the modelled limit, you are in for costs. It's more complex in that I think they look ahead, but there is always something of a race to avoid picking up the extra "social" overheads.
The question isn't "are my parents benefiting from their investement in installed solar". They are, massively.
The questions is - are they freeloading on the electricity system, and if so, how do we make them pay for it.
I'm arguing that the standing charge is basically the only way to prevent this sort of use being freeloading. Removing the standing charge and lumping it on the unit costs just makes it even better for my parents, and dumps all the expense on those not in the fortunate position of getting free electricity most of the year.
PB is a good read this morning. I don't have especially strong or informed views with regard to standing charges on electricity bills, but it's interesting to read some good arguments about the pros and cons from those who do. Thanks guys!
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
I'm with you on about half of that, but it is all tricky balances - wit Governments wanting as much as possible paid for by not-Governments. The grid is a social cost, but with lots of stakeholders and angles. And we are now in an generational renewal since most of it was built in say 1950-1980 and society has changed, as have locations of supply.
If your parents have invested in their house, then they should benefit, surely. Otherwise we are back into "I expect the Government to pay for my solar". And in practice it is a mixture of the two.
And self-generation reduces the need for local grid upgrades - something that on occasions can happen to self builders who add the last straw that breaks the camel's back, when they may get "you will have to pay for a substation upgrade", or sometimes a connection. There is a whole topic area about minimising these costs.
A similar effect can also happen - or perhaps used to happen - to people installing solar, especially larger arrays. Before I could do my 10k array back in 2016 I had to have the increase over the automatically permitted 4k pre-approved and checked.
The same happens with housing estates and road junctions - if you are the one who pushes it over the modelled limit, you are in for costs. It's more complex in that I think they look ahead, but there is always something of a race to avoid picking up the extra "social" overheads.
The question isn't "are my parents benefiting from their investement in installed solar". They are, massively.
The questions is - are they freeloading on the electricity system, and if so, how do we make them pay for it.
I'm arguing that the standing charge is basically the only way to prevent this sort of use being freeloading. Removing the standing charge and lumping it on the unit costs just makes it even better for my parents, and dumps all the expense on those not in the fortunate position of getting free electricity most of the year.
Yep - if you want to pull 1 watt from the grid you need to pay for that connection.
And if you don't want to pay £180 a year I'm more than happy to see you disconnect your supply but don't be surprised if you get charged £x000 to reconnect you later.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
I'm with you on about half of that, but it is all tricky balances - wit Governments wanting as much as possible paid for by not-Governments. The grid is a social cost, but with lots of stakeholders and angles. And we are now in an generational renewal since most of it was built in say 1950-1980 and society has changed, as have locations of supply.
If your parents have invested in their house, then they should benefit, surely. Otherwise we are back into "I expect the Government to pay for my solar". And in practice it is a mixture of the two.
And self-generation reduces the need for local grid upgrades - something that on occasions can happen to self builders who add the last straw that breaks the camel's back, when they may get "you will have to pay for a substation upgrade", or sometimes a connection. There is a whole topic area about minimising these costs.
A similar effect can also happen - or perhaps used to happen - to people installing solar, especially larger arrays. Before I could do my 10k array back in 2016 I had to have the increase over the automatically permitted 4k pre-approved and checked.
The same happens with housing estates and road junctions - if you are the one who pushes it over the modelled limit, you are in for costs. It's more complex in that I think they look ahead, but there is always something of a race to avoid picking up the extra "social" overheads.
The question isn't "are my parents benefiting from their investement in installed solar". They are, massively.
The questions is - are they freeloading on the electricity system, and if so, how do we make them pay for it.
I'm arguing that the standing charge is basically the only way to prevent this sort of use being freeloading. Removing the standing charge and lumping it on the unit costs just makes it even better for my parents, and dumps all the expense on those not in the fortunate position of getting free electricity most of the year.
The import / export price differential covers some of that surely?
We are going to be net positive on electricity over the year, exporting more than we import but we'll be paying 24p a unit for the electricity we import and getting only 12p a unit for the export.
(We could probably do a bit better than that in time by timing the import and export but the fundamentals remain.)
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
To be fair to Truss, I know, I know, we were facing potential average bills of £6,000 a year at the time, which would have driven many businesses and households into insolvency and inflation up to 20%.
A 6-month cap and a review would have been better.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
Something else missing is that they can’t be changed by us, only in agreement with 26 other countries who all have their own priorities.
Sure, politics is always hard and always involves tradeoffs and choices.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
Not a view the gilt markets are sharing:
The UK gilt markets are stabilising and easing lower this morning, offering a breath of relief after yesterday's aggressive sell-off. Benchmark borrowing costs spiked on Monday following comments from the new Prime Minister, Andy Burnham, regarding his intention to embrace "fiscal flexibility". However, prices have recovered slightly today as the appointment of his cabinet helped calm investor nerves. (Gemini)
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
The electricity grid is the critical national infrastructure. Everything depends on it - hospitals, businesses, schools, homes. Modern life. If the state cannot maintain that from general taxation then we may as well just all pack up and go home.
So is the internet. So is, to an extent, banking. The first question to ask before you use general taxation to subsidise anything is who is doing the lobbying?
Privatisation introduce a lot of complexity (cock-up or conspiracy etc) and trying to unpick it or introduce a subsidy here and there will come back and bite you later.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
Stolen from twitter, hat tip Lewis Goodall
Regional breakdown of full cabinet
North West: 7 Yorkshire: 4 North East: 2 West Mids: 2 London: 2 East Mids: 1 Wales: 2 South: 2 Scotland: 1
Putting that in context of number of Labour MPs in each region:
North West: 7/65 Yorkshire: 4/42 North East: 2/26 West Mids: 2/37 London: 2/59 East Mids: 1/29 Wales: 2/27 South East + South West: 2/59 Scotland: 1/37 East: 0/27
Maybe the pattern is that the cabinet is from places that "ought to" vote Labour, which is not the same as the places that did in 2024.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
So Brexit forced them to change their tune?
Interesting.
Or, y'know, politicians who were willing to put the effort in to work within EU structures to get rules changed put that work in and got the rules changed.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
Not a view the gilt markets are sharing:
The UK gilt markets are stabilising and easing lower this morning, offering a breath of relief after yesterday's aggressive sell-off. Benchmark borrowing costs spiked on Monday following comments from the new Prime Minister, Andy Burnham, regarding his intention to embrace "fiscal flexibility". However, prices have recovered slightly today as the appointment of his cabinet helped calm investor nerves. (Gemini)
Well I'd argue that the very modest rally is more about the Miliband risk premium going. The gilt market never likes spending announcements, and small populist ones that achieve nothing and all add up are not well regarded.
Darren Jones says none of VAT cut is funded. There was zero in Government budget for Digital ID.
So you're saying, Darren, that your ID card project was completely unfunded and it's a massive gotcha that VAT on electricity bills is also unfunded.
Difference is he never said digital ID was funded. Burnham government did however say the VAT cut was funded. Either incompetent or dishonest.
ID cards are just as funded, or unfunded, as removal of VAT on Electricity bills. Darren Jones was simply, and inadvertently, pointing out this fact about his own project.
Governments can forgo tax or move expenditure around as they wish. On their own rules they are supposed to get OBR to check the numbers add up. Burnham can point to a temporary offset that will last them until the next budget when the whole thing will go through the OBR washing machine.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
Not a view the gilt markets are sharing:
The UK gilt markets are stabilising and easing lower this morning, offering a breath of relief after yesterday's aggressive sell-off. Benchmark borrowing costs spiked on Monday following comments from the new Prime Minister, Andy Burnham, regarding his intention to embrace "fiscal flexibility". However, prices have recovered slightly today as the appointment of his cabinet helped calm investor nerves. (Gemini)
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
That connection still needs to be maintained - and it’s relatively common in business to have both a monthly fee (the standing charge) and a usage fee on top.
The electricity grid is the critical national infrastructure. Everything depends on it - hospitals, businesses, schools, homes. Modern life. If the state cannot maintain that from general taxation then we may as well just all pack up and go home.
So is the internet. So is, to an extent, banking. The first question to ask before you use general taxation to subsidise anything is who is doing the lobbying?
Privatisation introduce a lot of complexity (cock-up or conspiracy etc) and trying to unpick it or introduce a subsidy here and there will come back and bite you later.
Both the internet and our banking industry depend on electricity. It is fundamental.
Delurking for a quick post on the Burnham appointment:
As others have said, these sorts of announcements re the VAT and the drilling show he has the political instincts that Starmer lacked. It might be a bit muddled with the figures, but the size of the costings is outweighed by the political goodwill he can generate from such a move.
His cabinet, too, is generally pretty sound with a few exceptions (Powell at Education being the obvious one - Rayner and Haigh also don’t contribute to the “fresh new broom” narrative, but all needed to be rewarded for political reasons).
There are, however, several clouds on the horizon:
1) the cull of the Starmer loyalists (which, considering most of them were failures, is not a great loss) will however generate a significant amount of ill feeling. This can be seen with Darren Jones’ intervention this morning. Figures like Reeves, Jones, Lammy, Reed, Phillipson (remaining in cabinet but with a severe demotion) are unlikely to want this to be the end of their political careers.
2) the immediate feel-good vibes are not going to survive the country’s fundamentally challenging fiscal and economic outlook. Money needs to be found for defence, care, the new levelling up agenda - and that in essence requires cuts elsewhere, borrowing, or tax rises.
3) the lack of mandate is going to continue to be a millstone, particularly if Burnham majors on this idea of radical change.
My thoughts remain the same as before Burnham took over. If he really wants to lead a transformative government and wants the time to really institute some of the stuff he is talking about, the only way forward is a new mandate.
If these initial moves provide a decent enough bounce, the smart move is a general election in the spring, which also plausibly vanquishes the Starmer-loyalist problem if he gets his own mandate. I don’t think Burnham will have a better time. I think if he holds on til 28-29, his chances of getting another term are materially diminished.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
To be fair to Truss, I know, I know, we were facing potential average bills of £6,000 a year at the time, which would have driven many businesses and households into insolvency and inflation up to 20%.
A 6-month cap and a review would have been better.
A clear way to fund it would have been better too. But yes something had to be done, for sure.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
It is - but the British budget is stuffed to the gunwales with unfunded spending and imaginary future tax rises to make the numbers add up. Untangling all of that is a big job and not the work of one day, but Burnham has managed to take a step of nearly £1bn in the right direction.
Epic day yesterday with Burnham sacking Starmer's loyalists and replacing them with excellent appointments not least John Healey but also Streeting in defence, Mahmood remaining at home, sidelining Miliband to Foreign Secretary, and ending Phillipson's time in Education
His cut in VAT is good politics and if I was a Labour supporter I would be very encouraged going forward
Certainly Burnham has stamped his authority on his government and whilst he has many problems ahead Healey should at least reassure the bond markets
He should have announced the VAT cut yesterday instead of going on about street sleepers, something that nobody is bothered about.
However street sleepers is something Burnham cares about clearly, and if he manages to improve the situation, good luck to him.
Most prime ministers don't achieve anything very much. At best they stem the rot, hold the fort, muddle through, and at worst they just add to the confusion. A PM saying, I did that and it was good, is a rare thing.
I agree that if Burnham does manage to improve the street sleeping situation that can only be a good thing, however I believe the numbers have risen in Manchester over the last 2-3 years? It's a bit of an eye opener to see the boosting of 'Manchesterism' when Manchester pretty much matches Glasgow on most metrics. The chances of the local and state media praising Glasgow rather than screeching about potholes and junkies is precisely zero.
One of Burnham's arguments is that he wasn't able to do what was necessary on rough sleeping in Manchester due to a lack of devolved powers. I don't know if Scotland does have better arrangements. The rough sleeping situation isn't great in Scotland either however.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
Not a view the gilt markets are sharing:
The UK gilt markets are stabilising and easing lower this morning, offering a breath of relief after yesterday's aggressive sell-off. Benchmark borrowing costs spiked on Monday following comments from the new Prime Minister, Andy Burnham, regarding his intention to embrace "fiscal flexibility". However, prices have recovered slightly today as the appointment of his cabinet helped calm investor nerves. (Gemini)
Well I'd argue that the very modest rally is more about the Miliband risk premium going. The gilt market never likes spending announcements, and small populist ones that achieve nothing and all add up are not well regarded.
I am sure you are right that the choice of CoE is the major factor but 0% VAT on electricity hasn't melted the markets.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
The 'poor'* have access to social tariffs which are another subsidy loaded onto standing charges or unit costs. If you change it then there is an argument of double bubble. Or there is the complexity of reducing the social tariff to compensate i.e the poor paying a greater increase in unit costs compared to non-poor. This stuff is complex given the interrelationship between costs, direct subsidies and indirect subsidies.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Our latest voting intention poll, conducted shortly before the change in PM, shows a close race, with Labour and the Tories each within the margin of error of Reform UK for the first time in more than a year
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
It is - but the British budget is stuffed to the gunwales with unfunded spending and imaginary future tax rises to make the numbers add up. Untangling all of that is a big job and not the work of one day, but Burnham has managed to take a step of nearly £1bn in the right direction.
Well, we'll see. The announcement is really just a stunt isn't it? Just a way to be seen to be doing something early on. The real test will be what Healey manages to put together in the budget. I'm not sure he's ever shown much sign of being tough on spending in the past, and he's very likely to let Streeting have some more money. So it'll be a squeeze to say the least.
(I do think that Streeting might be quite a good choice for Defence. He may be able to improve procurement etc, although with everyone targeting the headline spend vs GDP that's not going to be much help)
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
So Brexit forced them to change their tune?
Interesting.
Or, y'know, politicians who were willing to put the effort in to work within EU structures to get rules changed put that work in and got the rules changed.
A rule that we were told couldn't change pre-Brexit and was a catalyst for such change post Brexit.
We've heard all these arguments before. Yes, you can change something but only if a QMV supermajority of the whole EU agree.
As I predicted on here yesterday when someone asked who is in charge while they drive to the Palace:
Russian warship carries out rare live-fire exercise 45 miles off UK coast
A Russian warship conducted a rare live-fire exercise in the Channel 45 miles south of Plymouth on Monday, the day Andy Burnham was appointed as prime minister.
Our latest voting intention poll, conducted shortly before the change in PM, shows a close race, with Labour and the Tories each within the margin of error of Reform UK for the first time in more than a year
Let me throw in a political angle on the RETAIL Electricity Price debate. That is the ratio of Unit Electricity Prices to Unit Gas Prices.
In the UK we have historically had an anomalously high price of electricity compared to gas, compared to peer countries.
This is a graph by Claude, which is in the ballpark, comparing UK average to EU average ratio: Under David Cameron, and I think Ed Milliband before him, the trend was towards relatively expensive electricity. Given that the secular trend is towards electricity, and there is lots of information-free shouty politics around "Gas! Gas! Quick, boys!", that will be unwound to create eventually a background which is neutral or trending the other way. Removing VAT on electricity only fits that context.
Politically that is very convenient, on top of the benefit felt by less wealthy sectors of society.
Looking at he numbers, currently price caps per kWh are 26.11p electricity, and 7.33p gas. That is a 3.56 ratio. 12 months ago those numbers were 25.73p elec and 5.33p gas, a ratio of 4.82.
There is also background because of the Ukraine War and then Trump's War, so two effects. And maybe the wars will be a stalking horse justification for political moves.
There is also a benign background for Government policy of encouraging growth of electric heating. The crude numbers go in favour of electrics when the ratio falls to approximately 3.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
The 'poor'* have access to social tariffs which are another subsidy loaded onto standing charges or unit costs. If you change it then there is an argument of double bubble. Or there is the complexity of reducing the social tariff to compensate i.e the poor paying a greater increase in unit costs compared to non-poor. This stuff is complex given the interrelationship between costs, direct subsidies and indirect subsidies.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Are there any social tariffs for electricity and gas? I am not aware of any.
The water companies have Assist schemes but they are mainly for those in debt. BT have a social tariff for telecoms (Home Essentials) though they keep that pretty quiet ;-)
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
I'm moving from London to Somerset in September, and plan to become a south west nationalist. I'm already offended by this government's make-up. Bet they will put up tax on cider and destroy my acquired identity.
Your user name on PB's new commenting system will be ManOfWestCountry ?
Well as its not ManOfLondon now, I don't think so.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
The main difference with 2022 is that it's much more modest in scope, and it's a limited sum of money. In 2022 Truss wrote a blank cheque to spend whatever it took to keep energy prices below a cap.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
It still looks a bit like unfunded spending dressed up.
It is - but the British budget is stuffed to the gunwales with unfunded spending and imaginary future tax rises to make the numbers add up. Untangling all of that is a big job and not the work of one day, but Burnham has managed to take a step of nearly £1bn in the right direction.
Well, we'll see. The announcement is really just a stunt isn't it? Just a way to be seen to be doing something early on. The real test will be what Healey manages to put together in the budget. I'm not sure he's ever shown much sign of being tough on spending in the past, and he's very likely to let Streeting have some more money. So it'll be a squeeze to say the least.
(I do think that Streeting might be quite a good choice for Defence. He may be able to improve procurement etc, although with everyone targeting the headline spend vs GDP that's not going to be much help)
The budget is the big test, yes. The announcements now seem to be about creating a positive vibe and setting the tone for the new government, rather than being the substance of it.
My main criticism is that the vibe is all wrong. He's creating the expectation that it's all easy, and he can find money down the back of the sofa to fund giveaways. But the fiscal situation for the country is dire, and so much necessary spending has been delayed, that I don't see a way to resolve it without having to take some really unpopular and unpleasant steps. I don't think Burnham is really preparing the ground here, so I expect he'll be looking to delay the reckoning again, just as those who went before him did.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
So Brexit forced them to change their tune?
Interesting.
Or, y'know, politicians who were willing to put the effort in to work within EU structures to get rules changed put that work in and got the rules changed.
A rule that we were told couldn't change pre-Brexit and was a catalyst for such change post Brexit.
We've heard all these arguments before. Yes, you can change something but only if a QMV supermajority of the whole EU agree.
Sure, it suited lots of people to pretend that the rule couldn't be changed - doesn't make it true.
A small yet significant announcement. The overture to an autumn budget.
Compare and contrast with Starmer/Reeves first announcement being to cut the WFA...
Indeed; as a spending matter it's in the roundings, and not doing the ID card scheme is clearly an avoided cost to balance it off, in the short term at least. The more pertinent point is that Darren Jones, previously a mild mannered, competent and loyal minister, is clearly very p***ed off.
Loyal to the old government, which makes him dangerous. He may be overdoing it, but if I had been sacked from the cabinet to make space for Louise Haigh, I think I would be an unhappy bunny.
BTW, anyone done a map of the constituencies of the old and new cabinet? My impression is that the Granadaland mafia thing is real, but I'm not sure and some evidence would be good.
R4 this morning said, as I recall, four from London and the South East, seven from the NW, four from Yorkshire, others spread around the country. Aside from Labour now being very London-lite, it didn't sound too bad.
Stolen from twitter, hat tip Lewis Goodall
Regional breakdown of full cabinet
North West: 7 Yorkshire: 4 North East: 2 West Mids: 2 London: 2 East Mids: 1 Wales: 2 South: 2 Scotland: 1
Which really is a pretty good balance, when you allow for the areas where Labour is weak (such as the south) with fewer people to choose from. The big change is the diminished influence of London - which probably explains some of the kickback when you consider how hugely London-dominated Labour is in MPs, peers, activists, officials and members.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
The 'poor'* have access to social tariffs which are another subsidy loaded onto standing charges or unit costs. If you change it then there is an argument of double bubble. Or there is the complexity of reducing the social tariff to compensate i.e the poor paying a greater increase in unit costs compared to non-poor. This stuff is complex given the interrelationship between costs, direct subsidies and indirect subsidies.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Are there any social tariffs for electricity and gas? I am not aware of any.
The water companies have Assist schemes but they are mainly for those in debt. BT have a social tariff for telecoms (Home Essentials) though they keep that pretty quiet ;-)
Thanks for the correction as I am out of date now. Seems they've been replaced by another form of subsidy - but targeted and in an interesting way.
Darren Jones goes in two-footed. Burnham needs to call an election to put a stop to that.
Burnham should have kept Darren Jones within the tent. I think it was probably the biggest mistake of his first day.
Burnham can ignore Darren Jones easily.
Burnham's big mistake was keeping Mahood in Home because of what to do about her immigration policies. I don't personally like her policies but I am making a business of government point here.
If you agree with what Mahood is trying to do, and I assume Burnham broadly is in favour, you don't want Mahood to be leading on it because she is toxic and has made the policies toxic with your most important stakeholders. You want someone else these stakeholders will give time of day to to lead the initiative.
If on the other hand you want to change the policies, Mahood won't do that meaningfully. She is massively invested in them
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
So Brexit forced them to change their tune?
Interesting.
Or, y'know, politicians who were willing to put the effort in to work within EU structures to get rules changed put that work in and got the rules changed.
A rule that we were told couldn't change pre-Brexit and was a catalyst for such change post Brexit.
We've heard all these arguments before. Yes, you can change something but only if a QMV supermajority of the whole EU agree.
Who said it couldn’t be changed because they were carefully telling you the simple bit - ignoring the extra bit that said unless or until we get to the point that 14 other countries see the problem so can change it.
Remember what I’ve said for years - Farage is great at finding “problems” that are simple to explain where it is very hard to impossible to correct his intentional “mistakes”
Our latest voting intention poll, conducted shortly before the change in PM, shows a close race, with Labour and the Tories each within the margin of error of Reform UK for the first time in more than a year
Early on there was a suggestion that Labour wanted to be up against Reform because they had more baggage. I was sceptical about that because you can’t blame Reform for the mess of the last 10 years (and no, Brexit it isn’t a factor as Labour could have reversed that and haven’t).
So, do Labour need to ease off? No good destroying Reform before the election unless you’re super confident of beating the Tories.
Darren Jones goes in two-footed. Burnham needs to call an election to put a stop to that.
Burnham should have kept Darren Jones within the tent. I think it was probably the biggest mistake of his first day.
Burnham can ignore Darren Jones easily.
Burnham's big mistake was keeping Mahood in Home because of what to do about her immigration policies. I don't personally like her policies but I am making a business of government point here.
If you agree with what Mahood is trying to do, and I assume Burnham broadly is in favour, you don't want Mahood to be leading on it because she is toxic and has made the policies toxic with your most important stakeholders. You want someone else these stakeholders will give time of day to to lead the initiative.
If on the other hand you want to change the policies, Mahood won't do that meaningfully. She is massively invested in them
Is Mahmood toxic ? I think she's done a decent job tbf.
Darren Jones goes in two-footed. Burnham needs to call an election to put a stop to that.
Burnham should have kept Darren Jones within the tent. I think it was probably the biggest mistake of his first day.
Burnham can ignore Darren Jones easily.
Burnham's big mistake was keeping Mahood in Home because of what to do about her immigration policies. I don't personally like her policies but I am making a business of government point here.
If you agree with what Mahood is trying to do, and I assume Burnham broadly is in favour, you don't want Mahood to be leading on it because she is toxic and has made the policies toxic with your most important stakeholders. You want someone else these stakeholders will give time of day to to lead the initiative.
If on the other hand you want to change the policies, Mahood won't do that meaningfully. She is massively invested in them
Mahmood not Mahmood.
And her policies are right. Especially on ILR. Giving access to hundreds of thousands of people the benefits system will cost billions. It is only delayed by five years.
Things change all the time. When I started work I was promised a pension from the state at 65, now it’s 67.
@Casino_Royale you stated on the previous thread that vat on fuel being reduced to 0% is only possible due to Brexit.
Not true. Perfectly permitted within the EU.
My understanding is you can have 0% in the EU, but you can't reduce it to 0% if it was already on the oridinary or reduced rate - a ratchet effect if you will. This is why Blair could only reduce it to 5%. Can't add new things to 0% rate hence tampon tax difficulties etc.
But happy to be corrected - this is from memory.
The EU changed the VAT directive rules in 2022, so that, for example, Ireland has been able to reduce the VAT on period products to 0%.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
So Brexit forced them to change their tune?
Interesting.
Or, y'know, politicians who were willing to put the effort in to work within EU structures to get rules changed put that work in and got the rules changed.
A rule that we were told couldn't change pre-Brexit and was a catalyst for such change post Brexit.
We've heard all these arguments before. Yes, you can change something but only if a QMV supermajority of the whole EU agree.
Sure, it suited lots of people to pretend that the rule couldn't be changed - doesn't make it true.
No, it was entirely sincere. If you can't find 14 countries to agree with you then it can't be changed.
In practice, it's very very difficult, as Cameron found out to his cost. It's not like lobbying your MP.
Our latest voting intention poll, conducted shortly before the change in PM, shows a close race, with Labour and the Tories each within the margin of error of Reform UK for the first time in more than a year
Delurking for a quick post on the Burnham appointment:
As others have said, these sorts of announcements re the VAT and the drilling show he has the political instincts that Starmer lacked. It might be a bit muddled with the figures, but the size of the costings is outweighed by the political goodwill he can generate from such a move.
His cabinet, too, is generally pretty sound with a few exceptions (Powell at Education being the obvious one - Rayner and Haigh also don’t contribute to the “fresh new broom” narrative, but all needed to be rewarded for political reasons).
There are, however, several clouds on the horizon:
1) the cull of the Starmer loyalists (which, considering most of them were failures, is not a great loss) will however generate a significant amount of ill feeling. This can be seen with Darren Jones’ intervention this morning. Figures like Reeves, Jones, Lammy, Reed, Phillipson (remaining in cabinet but with a severe demotion) are unlikely to want this to be the end of their political careers.
2) the immediate feel-good vibes are not going to survive the country’s fundamentally challenging fiscal and economic outlook. Money needs to be found for defence, care, the new levelling up agenda - and that in essence requires cuts elsewhere, borrowing, or tax rises.
3) the lack of mandate is going to continue to be a millstone, particularly if Burnham majors on this idea of radical change.
My thoughts remain the same as before Burnham took over. If he really wants to lead a transformative government and wants the time to really institute some of the stuff he is talking about, the only way forward is a new mandate.
If these initial moves provide a decent enough bounce, the smart move is a general election in the spring, which also plausibly vanquishes the Starmer-loyalist problem if he gets his own mandate. I don’t think Burnham will have a better time. I think if he holds on til 28-29, his chances of getting another term are materially diminished.
Ultimately, Burnham knows that a) he's secure until the GE; Labour won't follow the Tories down the path of junking another leader, b) he starts with a lot of goodwill from his backbenchers and the wider political environment, and c) ultimately the success or failure of his agenda is what will matter.
Hence upsetting the Starmerites is the lesser cost, compared to not having a cabinet bought into his programme. And they won't do themselves any favours inside the party if they're seen to rock the boat during its honeymoon voyage.
As I've said before, I do now think the '2029 or later' bet for the year of next GE, at odds-on, is a screaming lay on BFE.
A lot hangs on whether Farage and Reform can recover from recent wobbles or continue to suffer sinking credibility, reputation and polling.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
The 'poor'* have access to social tariffs which are another subsidy loaded onto standing charges or unit costs. If you change it then there is an argument of double bubble. Or there is the complexity of reducing the social tariff to compensate i.e the poor paying a greater increase in unit costs compared to non-poor. This stuff is complex given the interrelationship between costs, direct subsidies and indirect subsidies.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Are there any social tariffs for electricity and gas? I am not aware of any.
The water companies have Assist schemes but they are mainly for those in debt. BT have a social tariff for telecoms (Home Essentials) though they keep that pretty quiet ;-)
They do exist, as you say. The Telegraph was fluffing its outrage about one last week, implying with its headline that it applied to many times as people as was actually the case.
Whilst we continue to have other subsidies that are for far wealthier people, eg on childcare for people making up to £100k per annum, I don't see a real problem - beyond perhaps political presentation.
Delurking for a quick post on the Burnham appointment:
As others have said, these sorts of announcements re the VAT and the drilling show he has the political instincts that Starmer lacked. It might be a bit muddled with the figures, but the size of the costings is outweighed by the political goodwill he can generate from such a move.
His cabinet, too, is generally pretty sound with a few exceptions (Powell at Education being the obvious one - Rayner and Haigh also don’t contribute to the “fresh new broom” narrative, but all needed to be rewarded for political reasons).
There are, however, several clouds on the horizon:
1) the cull of the Starmer loyalists (which, considering most of them were failures, is not a great loss) will however generate a significant amount of ill feeling. This can be seen with Darren Jones’ intervention this morning. Figures like Reeves, Jones, Lammy, Reed, Phillipson (remaining in cabinet but with a severe demotion) are unlikely to want this to be the end of their political careers.
2) the immediate feel-good vibes are not going to survive the country’s fundamentally challenging fiscal and economic outlook. Money needs to be found for defence, care, the new levelling up agenda - and that in essence requires cuts elsewhere, borrowing, or tax rises.
3) the lack of mandate is going to continue to be a millstone, particularly if Burnham majors on this idea of radical change.
My thoughts remain the same as before Burnham took over. If he really wants to lead a transformative government and wants the time to really institute some of the stuff he is talking about, the only way forward is a new mandate.
If these initial moves provide a decent enough bounce, the smart move is a general election in the spring, which also plausibly vanquishes the Starmer-loyalist problem if he gets his own mandate. I don’t think Burnham will have a better time. I think if he holds on til 28-29, his chances of getting another term are materially diminished.
Ultimately, Burnham knows that a) he's secure until the GE; Labour won't follow the Tories down the path of junking another leader, b) he starts with a lot of goodwill from his backbenchers and the wider political environment, and c) ultimately the success or failure of his agenda is what will matter.
Hence upsetting the Starmerites is the lesser cost, compared to not having a cabinet bought into his programme.
As I've said before, I do now think the '2029 or later' bet for the year of next GE, at odds-on, is a screaming lay on BFE.
A lot hangs on whether Farage and Reform can recover from recent wobbles or continue to suffer sinking credibility, reputation and polling.
I'd add a potential Number Four to that list of benefits, that is items where Starmer has taken a downside and the upside is yet to emerge. I think there's a whole list, but the impact is in the future.
Delurking for a quick post on the Burnham appointment:
As others have said, these sorts of announcements re the VAT and the drilling show he has the political instincts that Starmer lacked. It might be a bit muddled with the figures, but the size of the costings is outweighed by the political goodwill he can generate from such a move.
His cabinet, too, is generally pretty sound with a few exceptions (Powell at Education being the obvious one - Rayner and Haigh also don’t contribute to the “fresh new broom” narrative, but all needed to be rewarded for political reasons).
There are, however, several clouds on the horizon:
1) the cull of the Starmer loyalists (which, considering most of them were failures, is not a great loss) will however generate a significant amount of ill feeling. This can be seen with Darren Jones’ intervention this morning. Figures like Reeves, Jones, Lammy, Reed, Phillipson (remaining in cabinet but with a severe demotion) are unlikely to want this to be the end of their political careers.
2) the immediate feel-good vibes are not going to survive the country’s fundamentally challenging fiscal and economic outlook. Money needs to be found for defence, care, the new levelling up agenda - and that in essence requires cuts elsewhere, borrowing, or tax rises.
3) the lack of mandate is going to continue to be a millstone, particularly if Burnham majors on this idea of radical change.
My thoughts remain the same as before Burnham took over. If he really wants to lead a transformative government and wants the time to really institute some of the stuff he is talking about, the only way forward is a new mandate.
If these initial moves provide a decent enough bounce, the smart move is a general election in the spring, which also plausibly vanquishes the Starmer-loyalist problem if he gets his own mandate. I don’t think Burnham will have a better time. I think if he holds on til 28-29, his chances of getting another term are materially diminished.
Ultimately, Burnham knows that a) he's secure until the GE; Labour won't follow the Tories down the path of junking another leader, b) he starts with a lot of goodwill from his backbenchers and the wider political environment, and c) ultimately the success or failure of his agenda is what will matter.
Hence upsetting the Starmerites is the lesser cost, compared to not having a cabinet bought into his programme. And they won't do themselves any favours inside the party if they're seen to rock the boat during its honeymoon voyage.
As I've said before, I do now think the '2029 or later' bet for the year of next GE, at odds-on, is a screaming lay on BFE.
A lot hangs on whether Farage and Reform can recover from recent wobbles or continue to suffer sinking credibility, reputation and polling.
Can it be later than 2029 (without a major crisis?)
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
The 'poor'* have access to social tariffs which are another subsidy loaded onto standing charges or unit costs. If you change it then there is an argument of double bubble. Or there is the complexity of reducing the social tariff to compensate i.e the poor paying a greater increase in unit costs compared to non-poor. This stuff is complex given the interrelationship between costs, direct subsidies and indirect subsidies.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Are there any social tariffs for electricity and gas? I am not aware of any.
The water companies have Assist schemes but they are mainly for those in debt. BT have a social tariff for telecoms (Home Essentials) though they keep that pretty quiet ;-)
They do exist, as you say. The Telegraph was fluffing its outrage about one last week, implying with its headline that it applied to many times as people as was actually the case.
Whilst we continue to have other subsidies that are for far wealthier people, eg on childcare for people making up to £100k per annum, I don't see a problem.
I said I don't think they do exist. I'd be really interested if they do, for some of the clients I advise.
The Russian government has stopped publishing data on the balance of the treasury accounts. They stopped publishing this data on the same day as they announced that bond sales were suspended. As of July 16th Russia had 4.147 trillion roubles (about £39bn) in the treasury accounts, down from about 9 trillion at the start of the year. The Russian government deficit in the first half of 2026 was about 5.73 trillion roubles. They can't fund that through new bond sales now, so they have to find the money from elsewhere.
One of the concerns about Burnham is that he will be better at politics but worse at government that what went before.
We went through this in 2022, didn't we? Cutting prices this way gives most of the benefit to people who need it least and attenuates the "someone needs to be using less" signal that needs to operate during a supply crunch.
But I'm sure it will be popular.
Electricity as a proportion of fuel costs is much higher for poorer households than richer ones. Any cut to VAT is going to shovel more cash to large consumers, but this is not the worst example, evdn after taking into account EVs.
Selebian is right though - standing charges should be abolished ASAP if you really want to help poor households.
I don't think standing charges will be abolished - because standing costs are a thing that exists.
We used to have "no standing charge" tariffs - self-builders or renovators who had cut their energy use by 50-80% loved the, - and they did not survive when economic circumstances became more astringent.
In the UK we have had out of line prices compared to peer countries in Electricity being very expensive vs Gas (this is retail), with relatively far cheaper gas. There were steps made to rebalance that over the recent period, but there's more to come I think.
Never really understood this argument. All businesses have standing costs to some degree, but these costs are usually rolled into per unit prices. There isn’t an entrance charge to pubs or supermarkets.
A one-off connection fee makes sense. And they already exist.
The problem with rolling the network costs into the unit price is that with increasing volumes of domestic solar quite a large number of people are effectively freeloading by barely drawing any electricity from the grid, apart from at times of peak winter demand.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
That’s a fair criticism. Could be partly solved by fully variable tariffs for people with low energy use (which they are likely on anyway).
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
The 'poor'* have access to social tariffs which are another subsidy loaded onto standing charges or unit costs. If you change it then there is an argument of double bubble. Or there is the complexity of reducing the social tariff to compensate i.e the poor paying a greater increase in unit costs compared to non-poor. This stuff is complex given the interrelationship between costs, direct subsidies and indirect subsidies.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Are there any social tariffs for electricity and gas? I am not aware of any.
The water companies have Assist schemes but they are mainly for those in debt. BT have a social tariff for telecoms (Home Essentials) though they keep that pretty quiet ;-)
They do exist, as you say. The Telegraph was fluffing its outrage about one last week, implying with its headline that it applied to many times as people as was actually the case.
Whilst we continue to have other subsidies that are for far wealthier people, eg on childcare for people making up to £100k per annum, I don't see a problem.
I'd far rather invest in natalism than gerontocracy.
The former will generate taxes to pay for the latter, including you, whilst avoiding high immigration
Our latest voting intention poll, conducted shortly before the change in PM, shows a close race, with Labour and the Tories each within the margin of error of Reform UK for the first time in more than a year
Early on there was a suggestion that Labour wanted to be up against Reform because they had more baggage. I was sceptical about that because you can’t blame Reform for the mess of the last 10 years (and no, Brexit it isn’t a factor as Labour could have reversed that and haven’t).
So, do Labour need to ease off? No good destroying Reform before the election unless you’re super confident of beating the Tories.
Indeed.
I’ve seen plenty of polling which shows Labour win the next election if Farage is Reform leader/Reform first ot second in the polls thanks to massive levels of tactical voting.
(Heck even Starmer was going to win with some polls).
That tactical voting isn’t quite so strong if the Tories are first/second in the polls to Labour.
Comments
https://www.parliament.uk/business/commons/the-speaker/history-and-traditions-of-the-speakership/speakers-house-and-its-state-rooms/speakers-study/
It’s a choice. The government should intervene given we want to encourage people to get solar panels or insulate their homes.
But Trump has taken it to extremes, as there's no one in Congress to constrain him.
Whilst I see different lines left / right on attitude to the Israel/USA war on Iran, with Kemi being more supportive of the USA (unless her view has changed), and Farage's head being where it normally is, that is not dominant at least for the current Parliament.
But the right has a tension in the future for how to recast their enthusiasm for the USA as somehow being the future, when it is on a journey into the past, and has demonstrated that its democracy is fragile and vulnerable, never mind if Trump's regime's White Nationalist values continue to play out.
It is quite unpredictable where we will be in 2029. I think there is a decent likelihood that Reform will be in a worse place than now, dependent on about 17 different things. The biggest problem for the Conservatives is what it always was - what happens if the Labour Government succeeds; then Kemi is left floating in space shouting about woke. But that needs the Govt to get a handle on immigration, and our culture to begin to turn away from having fear as its dominant value.
As UK-in-Europe by geography or politics we have to be able deal with potential options "stunted still-democratic USA" or "imperial USA wanting its sphere of influence and Europe made irrelevant". Plus that Trump's National Security policy is now to interfere in European politics to destabilise and drive in the political far right to mirror his own regime's politics.
Equally
1) the users should be paying for it rather than the general public
2) as we see all the time Governments change projects for short term benefits - private companies when overseen correctly (I.e. not Ofwat) are a decent way of providing nationwide services
Most prime ministers don't achieve anything very much. At best they stem the rot, hold the fort, muddle through, and at worst they just add to the confusion. A PM saying, I did that and it was good, is a rare thing.
Other companies wrap those fixed costs into item margins. I don't have a to pay a standing charge to shop at Tesco! It can be done. Very low users of energy could be loss-making for companies, but then if I go and buy one loaf of bread at Tesco and use a manned till then I doubt the margin on that item covers the full costs to Tesco of making that loaf available to me (checkout staff, shelf stacking card charges or cash costs). As noted elsewhere, there used to be standing-charge free tariffs - I had one!
At least cutting the electricity price (I hadn't realised electricity only) is a step in the right direction.
Let’s also ignore that £1.8bn over 3 years is £600m a year, not £850m.
There is no actual budget for the £1.8bn. The cost (inevitably) is spread around multiple departments who were going to have to implement the digital ID system in their portals etc. So which departmental budgets are going to be cut to reflect this saving and cover the cost of the VAT cut?
As a starting point this is really suboptimal. It shows a willingness to play fast and loose with our accounts in a way that is going to alarm the bond market. It increases the apprehension that Healey has been promoted beyond his competence.
These numbers are small, this is nothing like Truss’s blank cheque for our gas. But it’s also a red flag. On day one.
My parents are probably typical of this. They have a big solar array and battery, plus a fairly efficient house, and therefore import zero electricity ten months of the year. When do they import? When it's freezing cold, dark and has been for days - and usually that's right when the UK electricity demand is at its peak.
The system costs are mainly determined by the peak load, not the average load, so having people who import ~100kwh a year but only at times of peak demand is insanely expensive relative to their usage - the real cost of their usage could well be in the order of £10/kwh.
A standing charge is the only sane way to price this sort of usage. Dumping the costs of supplying electricity to people like my parents onto the unit prices of others not so fortunate as to be in the same situation seems chronically unfair.
ETA: Our situation isn't that different. £10/month or so at most for electricity in the summer. If it cost more in winter then we'd get a battery (we don't have one yet) for time shifting the available solar and, particularly, for time shifting electricity purchase (cheap times) to use. Maybe the way is to have standing charge free tariffs for those who want, but they also have dynamic pricing.
It's a bit of an eye opener to see the boosting of 'Manchesterism' when Manchester pretty much matches Glasgow on most metrics. The chances of the local and state media praising Glasgow rather than screeching about potholes and junkies is precisely zero.
But as far as I’m concerned the cost is already dumped on the poor. The standing charge is often the majority of the cost for people on low incomes - so it needs to be reformed in some way at least.
This is one of the things that was always missing from the EU debate in Britain. EU rules can be changed.
We absolutely need to give governments space to do very minor things like this without converting it into a debate about the debt and deficit structure. That doesn't mean those don't need to be addressed, but one is short term tactics the other is a medium to long term plan, the overlap is negligible and massively overplayed in modern political commentary.
Now you may not like the cost of that access but I believe it’s perfectly valid for a fee to be charged to maintain that connection
To throw a tiny spanner towards, at any rate the works, was not VAT on electricity supplies introduced because it was EU policy? And if so, will removing it make rejoining just a teeny bit more difficult.
I must admit I haven't picked up on our new PM's view on the EU, but the traditional Left Wing view of the EU was that there were against it. That was why we had the 1975 Referendum which, IIRC, gave a 2:1 majority in favour on a 66% or thereabouts poll.
https://www.thesun.co.uk/news/38656592/kemi-badenoch-hammers-rivals-over-net-zero/
If your parents have invested in their house, then they should benefit, surely. Otherwise we are back into "I expect the Government to pay for my solar". And in practice it is a mixture of the two.
And self-generation reduces the need for local grid upgrades - something that on occasions can happen to self builders who add the last straw that breaks the camel's back, when they may get "you will have to pay for a substation upgrade", or sometimes a connection. There is a whole topic area about minimising these costs.
A similar effect can also happen - or perhaps used to happen - to people installing solar, especially larger arrays. Before I could do my 10k array back in 2016 I had to have the increase over the automatically permitted 4k pre-approved and checked.
The same happens with housing estates and road junctions - if you are the one who pushes it over the modelled limit, you are in for costs. It's more complex in that I think they look ahead, but there is always something of a race to avoid picking up the extra "social" overheads.
Interesting.
Dynamic pricing will reflect the cost of putting the additional generation on load to supply them. It won't reflect the system cost of having the capacity to supply them sat around all year, waiting for the few hours when it's wanted.
He's also removed a commitment to spend £1.8bn with a commitment to spend £850m - reducing the future national debt by £950m.
Only a few thousand more such announcements and the national debt will be eliminated!
Yet his policies in the medium term are guaranteed to weaken US power- for example low immigration means no Musks or Sergei Brins in the future (admittedly they are pretty problematic in the present, but they have undoubtedly had a soft power pull), and the US economy, for all its historic strength is not indestructible- especially if there is no longer any good will towards a country that has replaced intelligence with arrogance.
An authoritarian United States offers little that a China does not. A Democratic Europe, however, wins the soft power race hands down- which is part of why the US explicitly intends to weaken European democracy. The outrageous behaviour of the Traitor President towards Canada provides a terrible warning about where depending on the US can lead. So, Burnham makes nice to Trump, but we all know that his fingers are crossed... and they should be. We owe the United States nothing now.
But honesty is important too.
And it’s the only tool available at no notice , standing orders have a lot of things hidden in them including a large amount go cover paying bills not paid by other people
What would be the point of Burnham holding a GE to quieten Jones?
Is it the hope that Labour do so badly he loses his seat?
Burnham would surely be way odds-on to do worse than May if he holds a snap GE
Regional breakdown of full cabinet
North West: 7
Yorkshire: 4
North East: 2
West Mids: 2
London: 2
East Mids: 1
Wales: 2
South: 2
Scotland: 1
The questions is - are they freeloading on the electricity system, and if so, how do we make them pay for it.
I'm arguing that the standing charge is basically the only way to prevent this sort of use being freeloading. Removing the standing charge and lumping it on the unit costs just makes it even better for my parents, and dumps all the expense on those not in the fortunate position of getting free electricity most of the year.
And if you don't want to pay £180 a year I'm more than happy to see you disconnect your supply but don't be surprised if you get charged £x000 to reconnect you later.
We are going to be net positive on electricity over the year, exporting more than we import but we'll be paying 24p a unit for the electricity we import and getting only 12p a unit for the export.
(We could probably do a bit better than that in time by timing the import and export but the fundamentals remain.)
A 6-month cap and a review would have been better.
The UK gilt markets are stabilising and easing lower this morning, offering a breath of relief after yesterday's aggressive sell-off. Benchmark borrowing costs spiked on Monday following comments from the new Prime Minister, Andy Burnham, regarding his intention to embrace "fiscal flexibility". However, prices have recovered slightly today as the appointment of his cabinet helped calm investor nerves. (Gemini)
Privatisation introduce a lot of complexity (cock-up or conspiracy etc) and trying to unpick it or introduce a subsidy here and there will come back and bite you later.
North West: 7/65
Yorkshire: 4/42
North East: 2/26
West Mids: 2/37
London: 2/59
East Mids: 1/29
Wales: 2/27
South East + South West: 2/59
Scotland: 1/37
East: 0/27
Maybe the pattern is that the cabinet is from places that "ought to" vote Labour, which is not the same as the places that did in 2024.
Governments can forgo tax or move expenditure around as they wish. On their own rules they are supposed to get OBR to check the numbers add up. Burnham can point to a temporary offset that will last them until the next budget when the whole thing will go through the OBR washing machine.
It's a nonsense basically.
https://www.bbc.co.uk/news/articles/cx2vd3qgjy9o
As others have said, these sorts of announcements re the VAT and the drilling show he has the political instincts that Starmer lacked. It might be a bit muddled with the figures, but the size of the costings is outweighed by the political goodwill he can generate from such a move.
His cabinet, too, is generally pretty sound with a few exceptions (Powell at Education being the obvious one - Rayner and Haigh also don’t contribute to the “fresh new broom” narrative, but all needed to be rewarded for political reasons).
There are, however, several clouds on the horizon:
1) the cull of the Starmer loyalists (which, considering most of them were failures, is not a great loss) will however generate a significant amount of ill feeling. This can be seen with Darren Jones’ intervention this morning. Figures like Reeves, Jones, Lammy, Reed, Phillipson (remaining in cabinet but with a severe demotion) are unlikely to want this to be the end of their political careers.
2) the immediate feel-good vibes are not going to survive the country’s fundamentally challenging fiscal and economic outlook. Money needs to be found for defence, care, the new levelling up agenda - and that in essence requires cuts elsewhere, borrowing, or tax rises.
3) the lack of mandate is going to continue to be a millstone, particularly if Burnham majors on this idea of radical change.
My thoughts remain the same as before Burnham took over. If he really wants to lead a transformative government and wants the time to really institute some of the stuff he is talking about, the only way forward is a new mandate.
If these initial moves provide a decent enough bounce, the smart move is a general election in the spring, which also plausibly vanquishes the Starmer-loyalist problem if he gets his own mandate. I don’t think Burnham will have a better time. I think if he holds on til 28-29, his chances of getting another term are materially diminished.
Hope @jreynoldsMP is pleased with his new, bigger, department
It’s simply DBIST.
Better than all the rest.
Why the f*** were you doing them then?
A period of silence from him might be well advised.
So it will be smoke and mirrors to generate a positive headline.
* Has a definition in the Benefits legislation depending on the benefit
Ref: 23% (-1 from 12-13 Jul)
Con: 21% (+2)
Lab: 20% (+1)
Grn: 14% (-1)
LD: 12% (-1)
Res: 3% (=)
SNP: 3% (=)
PC: 2% (=)
Your: 0% (=)
Oth: 1% (=)
https://x.com/yougov/status/2079483818826743823?s=61&t=c6bcp0cjChLfQN5Tc8A_6g
(I do think that Streeting might be quite a good choice for Defence. He may be able to improve procurement etc, although with everyone targeting the headline spend vs GDP that's not going to be much help)
We've heard all these arguments before. Yes, you can change something but only if a QMV supermajority of the whole EU agree.
Russian warship carries out rare live-fire exercise 45 miles off UK coast
A Russian warship conducted a rare live-fire exercise in the Channel 45 miles south of Plymouth on Monday, the day Andy Burnham was appointed as prime minister.
Guardian live news blog
In the UK we have historically had an anomalously high price of electricity compared to gas, compared to peer countries.
This is a graph by Claude, which is in the ballpark, comparing UK average to EU average ratio:
Under David Cameron, and I think Ed Milliband before him, the trend was towards relatively expensive electricity. Given that the secular trend is towards electricity, and there is lots of information-free shouty politics around "Gas! Gas! Quick, boys!", that will be unwound to create eventually a background which is neutral or trending the other way. Removing VAT on electricity only fits that context.
Politically that is very convenient, on top of the benefit felt by less wealthy sectors of society.
Looking at he numbers, currently price caps per kWh are 26.11p electricity, and 7.33p gas. That is a 3.56 ratio. 12 months ago those numbers were 25.73p elec and 5.33p gas, a ratio of 4.82.
There is also background because of the Ukraine War and then Trump's War, so two effects. And maybe the wars will be a stalking horse justification for political moves.
There is also a benign background for Government policy of encouraging growth of electric heating. The crude numbers go in favour of electrics when the ratio falls to approximately 3.
(Edited to be more polite to Mr Cameron.)
The water companies have Assist schemes but they are mainly for those in debt. BT have a social tariff for telecoms (Home Essentials) though they keep that pretty quiet ;-)
My main criticism is that the vibe is all wrong. He's creating the expectation that it's all easy, and he can find money down the back of the sofa to fund giveaways. But the fiscal situation for the country is dire, and so much necessary spending has been delayed, that I don't see a way to resolve it without having to take some really unpopular and unpleasant steps. I don't think Burnham is really preparing the ground here, so I expect he'll be looking to delay the reckoning again, just as those who went before him did.
https://octopus.energy/press/octopus-supercharges-social-housing-with-new-tenant-power-tariff/
Burnham's big mistake was keeping Mahood in Home because of what to do about her immigration policies. I don't personally like her policies but I am making a business of government point here.
If you agree with what Mahood is trying to do, and I assume Burnham broadly is in favour, you don't want Mahood to be leading on it because she is toxic and has made the policies toxic with your most important stakeholders. You want someone else these stakeholders will give time of day to to lead the initiative.
If on the other hand you want to change the policies, Mahood won't do that meaningfully. She is massively invested in them
Remember what I’ve said for years - Farage is great at finding “problems” that are simple to explain where it is very hard to impossible to correct his intentional “mistakes”
So, do Labour need to ease off? No good destroying Reform before the election unless you’re super confident of beating the Tories.
Haven't seen Madri once.
And her policies are right. Especially on ILR. Giving access to hundreds of thousands of people the benefits system will cost billions. It is only delayed by five years.
Things change all the time. When I started work I was promised a pension from the state at 65, now it’s 67.
So be it.
In practice, it's very very difficult, as Cameron found out to his cost. It's not like lobbying your MP.
Hence upsetting the Starmerites is the lesser cost, compared to not having a cabinet bought into his programme. And they won't do themselves any favours inside the party if they're seen to rock the boat during its honeymoon voyage.
As I've said before, I do now think the '2029 or later' bet for the year of next GE, at odds-on, is a screaming lay on BFE.
A lot hangs on whether Farage and Reform can recover from recent wobbles or continue to suffer sinking credibility, reputation and polling.
Whilst we continue to have other subsidies that are for far wealthier people, eg on childcare for people making up to £100k per annum, I don't see a real problem - beyond perhaps political presentation.
The former will generate taxes to pay for the latter, including you, whilst avoiding high immigration
I’ve seen plenty of polling which shows Labour win the next election if Farage is Reform leader/Reform first ot second in the polls thanks to massive levels of tactical voting.
(Heck even Starmer was going to win with some polls).
That tactical voting isn’t quite so strong if the Tories are first/second in the polls to Labour.