When is a subsidy not a subsidy?

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I don’t know whether the strike price which the UK government has agreed for the electricity to be produced by Hinkley C is too high or not.  But then, neither does the government know; it’s a long-term commitment and only time will tell.  I’m not alone, though, in suspecting that the real beneficiaries will be the French and Chinese governments, which effectively own and control the companies involved.

The UK government has said all along that new nuclear power stations would not receive any subsidies from the UK government.  In a sense they’ve stuck to that commitment; they’ve merely intervened in the market to fix the price for the next half-century or so.  But the difference between paying a direct subsidy out of tax revenues and compelling consumers to pay an inflated price for their electricity bills is a fine one.  Cutting out the middleman (i.e. the government) doesn’t really make it any less of a subsidy.  It does though alter the nature of the “tax”.  An inflated price collected through electricity bills taxes people based on their consumption rather than on their ability to pay - it’s a more regressive tax when implemented in this fashion.

I’m not sure that it’s the whole story on the question of subsidy either.  What I’ve not seen much coverage of is the arrangements for eventual decommissioning.  In theory, the energy prices are set at a high enough level which allows companies to set aside a sum of money during the operational phase to pay for the work at the end.  But there are two problems with that approach.

The first is the (comparatively!) minor little issue that nobody knows what the cost of decommissioning will be 50 years hence.  And therefore nobody knows how large a fund is needed to pay for it.  All we can say with any degree of certainty is that all those involved have a clear incentive to underestimate rather than overestimate that cost.

The second is a rather more important one – this is simply not the way the capitalism operates, even when the “capitalists” are the French and Chinese governments.  Capitalism makes its profits and then walks away.  I have zero confidence that any arrangements put in place can guarantee that these costs will not fall back on the taxpayer when the plant eventually closes.  And I have a fairly high degree of confidence that all, or at the very least a significant proportion, of those costs will fall back on the taxpayer.

In making the agreement announced last week, the government is not only committing all of us to a hugely increased price for energy and putting a significant and important part of energy generation in the hands of foreign governments; it’s also leaving a big clear-up bill to our children and grandchildren.

Destructive jealousy

Tweet I don’t really understand why people are getting so worked up about the clear conclusion that if some areas of the UK benefit from the development of the new HS2 rail line, other areas of the UK will lose.  That is surely an inevitable concomitant of any investment in improved infrastructure – ‘extra’ economic activity in one place is lust as likely to be ‘displaced’ economic activity from somewhere else as it is to be genuinely ‘extra’.  Justifying a project on the basis of the competitive advantages derived in one place has an inevitable concomitant elsewhere.

I particularly don’t understand the knee-jerk reaction of some which is to argue that because some areas lose out from a particular investment, then that investment should not proceed.  It’s a bit like saying ‘because we can’t have it neither can you’.  Surely the more constructive responses to say ‘if you’re having it we want it too’?

My biggest reservation from the start about the HS2 proposal has been that it has been put forward as a stand-alone project rather than part of an overall strategy.  I can understand other areas being ahead of us in the queue, but my concern is about the fact that we don’t even seem to be in the queue at the moment and nobody seems to be putting the case that we should be.  Rather than opposing a scheme which will benefit others surely it is far more productive and constructive to demand inclusion of Wales in the longer term plans.

There’s a danger in the attitude being displayed here that infrastructure investment becomes a race to the bottom.

Trenches and trenches

Tweet There are increasing demands for the link from wind farms – both locally in Carmarthenshire and in Powys – to be taken underground.  From the point of view of minimising the impact on the scenery, it makes a lot of sense.

It does however add to the costs (although there is some dispute about the extent of that addition).  Whether it’s a cost worth paying is ultimately a matter of opinion.  Personally I’d like to see the detail of the cost impact before taking a firm view – it might be that the combination of overhead cables in some areas and underground cables in others will offer the best trade-off between cost and scenery.

There are however two major inconsistencies in some of the statements being made by those demanding that the links be underground.

The first is that the same people are also complaining about the high cost of energy, and wind energy in particular.  Yet they are demanding action which will effectively increase the cost.

The second is that some of those who now want to dig a trench across Carmarthenshire to bury electricity cables were implacable opponents of digging a trench across Carmarthenshire to bury gas pipes.  To me one trench looks much the same as another; insofar as it is damaging, it’s the trench which does the damage, not what is buried in it.

There are some hard facts that we cannot easily avoid:

·         We need to move away from carbon-based energy and base our economy on renewables

·         Effective use of renewables – wind, tide, hydro, solar – means siting the generators where the renewable energy is available.  That often means in the countryside.

·         All energy production and use has an environmental impact; the decision we face is either not to use energy, or else to decide which environmental impacts we’re prepared to support.

·         Energy costs may vary from time to time, but over the long term they are headed in only one direction – upwards.

Pretending that one or more of those things are not true, or that the consequences of them being true can somehow be avoided, may help politicians to win votes in elections, but it doesn’t make for a coherent energy policy.

Am I really a mass murderer?

Tweet Just a few days ago I referred to the politicians’ trick of presenting only two alternatives and trying to force us to choose between them as though there were no other way forward.  It’s probably a trick learnt from Sir Humphrey.  As if to illustrate the point, the Minister for Agriculture in England came out with a classic this week.

According to Owen Paterson the only options available to us are either that we adopt GM rice on a widespread basis or else millions of people die from vitamin A deficiency.  As if that weren’t enough, he went on to say that anyone opposing GM is thus a “wicked” person who is directly responsible for those avoidable deaths.

It’s a breath-taking piece of hyperbole – almost as if he set out with the intention of discrediting his own arguments.  But no; he is – apparently – entirely serious.

There shouldn’t be any need to point out the basic fallacy, which is that most of us get enough vitamin A from a varied diet and don’t need GM rice.  If people are not getting enough from their diet because they are over-dependent on a single crop, then the problem is that over-dependence - and the solution is to remove the over-dependence, not to tinker with the rice.

The problem with that solution – from his perspective at least – is that the “wicked” people condemning millions to die would then be seen not as the opponents of GM, but as the supporters of a fundamentally unjust and unequal world order.  People rather like Owen Paterson, in effect.

I’m not a fan of GM foods, it’s true.  But my opposition isn’t based on the question of the safety of eating them – the only concern generally recognised by GM fans.  It’s based rather on a belief that we don’t yet know the long-term effects of releasing organisms with exotic gene combinations – which if they ever could develop through evolution or selective breeding would take many generations – into the environment.  That other species will adapt is a given; how and how quickly is one of Rumsfeld’s “known unknowns”.

Supporters of GM always point to the advantages for the poor and hungry in support of their position – although I don’t think I’ve heard one claim, effectively, that anyone disagreeing with is a mass murderer.  Not until this week anyway.  But the main beneficiaries to date have been, and are likely to continue to be, the huge multinational agri-chemical businesses which produce them, not those who grow and consume them. 

In short, it’s the rich who gain most of all.  If it really were the only way of lifting people out of hunger and poverty, it might be a risk worth taking; and it might even be worth accepting that the companies concerned could keep their profits.  But that’s a mighty big – and wholly unsubstantiated – if.

Plans A, B, and C

Tweet No surprise that the apparent upturn in the economy is being claimed by the government as a vindication of their economic policies.  What we don’t know – and can never know – is the extent of any causal relationship between Plan A and the outcome.  We can, equally, never know whether Plan B or Plan C might have led to even better results, although one would never detect even a scintilla of doubt in the government’s statements. (Or those of the opposition, come to that.)

Despite all the political huffing and puffing, I rather suspect – but can no more prove than can anyone else – that following Labour’s Plan B would have resulted in a very similar outcome.

In the first place, the differences between Plan A and Plan B were insignificant in the order of things.  And in the second, capitalism and those who run the markets have the real economic power, not governments.  The problem with both Conservative Plan A and Labour Plan B is that neither of them sought to change that essential power relationship.  Both are effectively hostages to those who wield the real power.

Insofar as there is a difference between them, it is probably that the Tories are even more enthusiastic about remaining hostages than Labour.  It’s not much of a difference – and it’s certainly no substitute for an argument for real change.

Short-termism is the enemy

Tweet A little over 40 years ago, in 1972, I found myself standing outside the Rhydycar leisure centre in Merthyr, waiting for the results of the Merthyr by-election for which Plaid and its candidate, Emrys Roberts, had high hopes.  I got involved in a discussion with the late Harri Webb and another, sadly now also departed, comrade about the sort of Wales they wanted to see.

Harri was arguing for a free and open democracy, but Terry was a little more hesitant.  He was concerned that a Plaid government, having led Wales to independence, could subsequently lose power and that some of the Labour Party’s Unionist dinosaurs would come to power and undo all Plaid’s work.  Kinnock, Abse and Thomas were the names specifically mentioned as I recall. 

Harri’s response was typically robust.

“Oh”, he said, “we will have shot them in the first week.  Then we can have a free and open democracy.”

I’m not a great believer in the idea that shooting people changes anything very much, and I never really believed that he was serious – although one could never be entirely sure with Harri.  The conversation was brought to mind again recently by a number of apparently unconnected stories.

The first was the result of the Australian election, which the opposition won convincingly.  One of the factors believed to be behind the scale of the election victory was that the opposition promised to scrap the hugely unpopular carbon tax.  (There’s a parallel in the UK of course, with some politicians calling for scrapping those environmental measures which are perceived as being constraints on economic growth.  It is a call which might even prove popular.) 

The second is the debate about the proposed high speed rail line in the UK, and the growing suspicion that the cross-party consensus (at UK level anyway) in favour of the project is rapidly disintegrating for short term electoral considerations.

The third, returning to that discussion outside the Leisure Centre, is the question of the continued decline in the usage of the Welsh language, and the issue of what, if anything, can be done about it.

And the fourth is the increasing belief in government circles that our behaviour can be ‘nudged’ in a particular direction rather then forced that way by legislation.  Number 10 even has a ‘nudge unit’, apparently.

The thing that links all these strands is this; bringing about real long-term change depends on winning hearts and minds and creating a new consensus.  Winning an individual election is never enough; it’s the arguments which need to be won.  Almost anything which can be easily done by one government can be equally easily undone by the next.  Failure to convince people of the merits of a particular policy or direction enables others to take an unpopular stance against that policy or direction, and undermine the longer term commitment which is necessary to bring about real and fundamental change.

Whatever the issue, for any long-term policy the work of convincing people that it’s the right thing to do is the key to success, not the result of an individual election, nor the passing of laws, nor even the gentle ‘nudging’ of our behaviour - let alone shooting people.  And in the same way, ‘success’ isn’t measured by election results – it’s measured by the extent of change. 

Much of what passes for political debate seems to ignore that, and seek short term electoral success on the basis of populism.  In the real world, political short term electoralism is the enemy of real change; it is not the route to achieving it.

CO2, fracking, and fig leaves

Tweet Supporters of fracking – and the increased use of natural gas in general – frequently assert that burning gas produces fewer CO2 emissions than burning coal.  It’s one of those statements which is the truth and nothing but the truth - but it isn’t really the whole truth, particularly when presented in such a way as to suggest that it in any way “solves” the CO2 problem.

It isn’t emissions per se which cause the problem (or potential problem, for those still not entirely convinced).  It is, rather, the concentration of CO2 in the atmosphere.  If the earth’s systems – or even man-made systems – could maintain that concentration at a stable level within the right range, we could burn all the coal we like, with complete impunity.  (Well, not quite of course – CO2 isn’t the only problem with coal, but for the sake of an argument, let’s suppose that it is the only thing to worry about the moment.)

But those systems cannot achieve that; and whilst there is still scope for some debate about the impact of an increase in CO2 levels, there are two facts which are not seriously disputed at all.  The first is that CO2 levels are rising; and the second is that burning fossil fuels by mankind is responsible for at least part of that increase.

We know that burning coal and oil adds to CO2 levels in the atmosphere.  We also know that burning methane adds to CO2 levels in the atmosphere.  It may add less, but it is still a net addition to atmospheric CO2. What those advocating fracking and a wider switch to gas are supporting is no more than slowing the rate of increase in atmospheric CO2.  It is not about stabilising that level, and they don’t always seem to understand that key difference themselves.

Is it better to increase the level slowly rather than quickly?  Well, yes – although I’d use the phrase ‘less bad’ rather than better.  And if the choice is limited to ‘bad’ or ‘not quite so bad’, then it makes sense to choose the ‘not quite so bad’.  What we must not do though is to allow people to frame the debate as if these were the only two options.  It’s a typical politician’s trick; but it diverts attention and discussion away from other options by effectively removing them from sight.

Ultimately, the argument for fracking comes down to it providing jobs and adding to GDP whilst being less damaging than coal.  It’s also a fig leaf behind which politicians who know that burning fossil fuels is a problem, but want to oppose wind farms, can hide.  But a renewables based energy policy will provide even more jobs and might actually start to address the real issue.  We need to keep that real alternative in plain sight.  And take away the fig leaf.

Rabbits and lettuce

Tweet Yesterday, a group of AMs discussed the question of unwanted callers, particularly in the context of the old and vulnerable. Their concern was primarily around the element of scam and fraud of which many of the callers - whether in person or by telephone are guilty.

I’ve posted previously on the pernicious nuisance calls which I receive regularly when I’m working at home.  It goes wider than the Windows support scams, though. I also suffer regularly from the ones which leave recorded messages on my answerphone, but which never name the company nor leave any contact details.  Leaving me a recorded message telling me that I must press 9 to stop the calls is singularly unhelpful – even if I were to believe that it would actually have any effect anyway.

These calls are a real nuisance, and particularly so for the elderly and vulnerable who are at serious risk of being taken for a ride.  I find them a nuisance, and I don’t think I’m in either category - yet. It’s not easy to determine which calls are honest and which are not, although I start from the simple supposition that any organisation which chooses to ignore or attempt to circumvent TPS rules is unlikely to fall into the ‘totally honest’ category. 

I recently came across this report on the whole issue commissioned from GFK–NOP by Ofcom.  In principle I welcome any attention being given to this problem; we need to shine a bit of light on a murky part of our entrepreneurial sales based economy.

The report lists different types of calls indicating the proportion that fall into different categories.  One of those categories is “other” and this is the one into which “surveys” fall.  “Surveys” is a neat way of circumventing the TPS rules, because they’re not actually selling anything - according to them.  Some of them do, however, pass the details they collect on to other companies who will then try and sell you something.  And those companies can semi-legitimately claim that the TPS rules do not apply because by completing a survey you’ve agreed to be contacted.  A neat circumvention – the best response is never to answer any surveys; which is my standard response.

It’s a pity however that the report from GFK-NOP doesn’t really get to grips with the international callers, one of the big loop holes in the whole TPS system.  Nor does it name, let alone shame, the miscreants.  I wondered whether that might not be because a number of the "survey" calls that I get – despite having told them a number of times that I never answer surveys – are from a company called GFK-NOP; a company which itself uses an Indian call centre to make some of the calls.

At least nobody can say that Ofcom didn’t commission an expert in the field.  Some of us might think, though, that this particular expert has something of a vested interest in the subject.  I had a boss once who used to talk about never “putting rabbits in charge of lettuce production”.  Using a company which makes nuisance calls to produce a report on the subject sounds not dissimilar.

Target audiences

Tweet There was a rather strange feel to the wording of part of Cameron’s conference speech last week, when he was talking about stopping benefits for people under 25 years old.  The section which struck me in particular was this one:

"Think about it: with your children, would you dream of just leaving them to their own devices, not getting a job, not training, nothing? No – you’d nag and push and guide and do anything to get them on their way, and so must we.”

It tells us something about his target audience – and about the way he thinks.  Clearly, he wasn’t talking to those whose benefits he was proposing to stop.  Nor was he talking to their parents.  He was talking to ‘people like us’ (from his perspective – ‘people like him’ from mine).  The privileged, the well off, the middle classes whose children start with all the advantages and walk into jobs as a result of daddy’s connections or the school they went to.  He’s talking to those who share ‘our’ background, values, and advantages. 

But the final four words of the passage are also interesting – ‘and so must we’.  It’s almost as though he sees his government as surrogate parents to all those children brought up by parents who don’t act in the way he described, with the task of taking their place with all the nudging, pushing and nagging.  He’s not, though, proposing that the state should in any way fulfil the other part of the role of those ‘good’ parents – the bit about providing the resources, the contacts, the advantages.  Quite the reverse in fact.

He’s deconstructing a very complex set of factors which determine which young people find work and which end up on the dole, and reducing it to a simplistic matter of the use of the stick, whilst keeping the carrot for ‘our own’.  But then, he’s not really interested in ‘solving’ the problem anyway.  He knows as well as I do that the savings involved are so small as to be insignificant in the overall scale of government spending, so it’s not really about money either.

It is, rather, a blatant electoral appeal to a particular set of prejudices and attitudes, based on stigmatising and casting out a section of the populace which he calculates will never vote for him and his party anyway.  It might even work electorally, but it will add to inequality in society.  That’s probably another bonus from his perspective.

Parasitic Power Consumption

Tweet There was a letter in a recent edition of the Carmarthen Journal – from one of the usual suspects – claiming that wind farms are 'parasitic' users of power from the grid.  'Parasitic' is a word chosen to give a nice negative feel to it. Wind farms still need some electricity, he said, even when the wind isn’t blowing, and they can only get this from the grid – generated, of course, by other types of power stations, usually those using fossil fuel.  As far as it goes, it’s true, of course.  And it’s equally true, but never mentioned in such letters, that nuclear, coal, oil, and gas power stations need electricity – a great deal more electricity, as it happens – to power their offices etc. when those stations are not generating electricity.

So far, so factual.  The unique element about the claim in this particular letter, however, was that wind farms draw electricity from the grid to keep the blades turning, so that we won’t realise that they’re not generating electricity at the time.  The fact that some turbines can be seen turning on “windless” days is evidence, claimed the author, that the operators of wind farms reverse the turbines and use them as motors to turn the blades.  His final ‘proof’ of the claim was that a retired meter reader had told him so.  So now we know!

It’s not a new claim.  I’ve seen it made a number of times before, and the Internet makes it easy to repeat such claims - usually cross-referencing each other as evidence.  I don’t know how and where the claim originated, although that doesn’t seem to be important those repeating it.  It suits their argument, and the extent to which the claim is repeated makes it commonplace; that’s quite enough for them.

It’s not enough for me, though.  I want more than anecdotal repetition – but there is none to be found.  It should surprise me how many people are willing to believe that the companies really would keep the turbine blades turning on still days just to try and convince us that they are working when they aren’t, but somehow it doesn’t.  It’s akin to conspiracy theories, and much of the basis for most of those is the lack of trust (sadly not without justification) of officialdom in general.  It doesn’t help progress though.