Parliament is back in session, giving us a chance to see Burnham in action and under scrutiny. Right now he’s still in that sweet spot of being able to promise all things to all men. This will end with the budget, and the real challenge for his premiership will begin then.
Speaking of challenges, the UK 10-year is now over 5%, and the 30-year is at 5.8%, the highest since 2008. Is this all Burnham’s / Labour’s / the UK’s fault? Nope. But unfortunately, we are vulnerable given our lack of growth and our already high debt load. This will necessitate tough decisions for the Labour Party, and I am pessimistic about their chances.
The links this week start with Andy Burnham’s lack of understanding about growth, then how the UK consensus around climate action has broken down. Finally, we look at how the West has forgotten how to wage Great Power warfare.
https://thecritic.co.uk/why-andy-burnham-doesnt-get-growth/
- Chris Bayliss from The Critic turns his attention to how Andy Burnham simply doesn’t understand how growth works, and never will.
Burnham’s rough idea appears to be that if he can ensure state control of the suppliers of basic goods and services — particularly major utilities such as electricity and water — he can reduce the amount that the public have to spend on essentials, with the savings then available for people to spend on other things. If anything, this sounds closer to the classical liberal case for lower taxes, and the argument that wealth will fructify in the pockets of the public. However, what is lacking is any argument about how public control will reduce the costs of these basic essentials.
- I’ve had a look into how other nations, notably Singapore, handle their public goods and major utilities. There is scope in the UK for significant changes to our current regime. However, again, this requires significant work and leadership from the centre. So far this seems lacking.
- The key argument in Bayliss’s piece is that in the UK, we don’t allow scope for investment… as it would require higher prices, which would be unfair.
This might make the basis for an interesting argument that privatising certain utilities was always doomed to failure in Britain’s political climate, in which the public have come to regard politicians as being responsible for the provision of basic goods and services.
- I’m interested in this argument, but I’m not entirely sure I agree with it. I suspect a huge part of this is that wages have been stagnant for over 20 years. When wages are stagnant, of course any rise in essential services will anger the population.
- Ironically, we end up making these services ever worse and more expensive in the long run as investment is starved. The temptation for Burnham is to continue this trend, and as Bayliss argues, accelerate it.
- Michael Hill examines why the consensus around climate action in the UK has started to break down.
Voters often will the ends without willing the means. They want to reduce the country’s impact on global climate change, without harming their own finances. The climate consensus was able to thread this needle because it promised to do exactly that. This promise could be made for three main reasons:
It primarily focused on changing our electricity mix, which was both out of sight and out of mind for most people, and was responsible for 25% of our emissions in 2005.
It was at least possible to argue that the renewables push was going to cut bills eventually because the price of offshore wind in particular was falling fast.
In the early days of the consensus, it was possible to ignore the increased grid costs of renewables compared to firm power, as they were not that high.
- Fantastic start. Fundamentally, voters are hypocrites – or, if I’m being more generous, we are deluded (of course I want a six-pack, but I also want beer). Since 2008, there have been significant promises made to the British public about energy and how green energy would allow us to be a climate leader (relevant to the elites) and cheap, as marginal costs are zero (relevant to the majority).
- This is the key point for me:
Finally, grid costs become more expensive the more renewables you have. Intermittent clean energy always has higher grid costs than firm power: it requires more grid to be built (because it’s spread across many, often very remote sites), it often requires subsidy that pays generators even when their electricity isn’t needed, and it means gas power plants that once ran continuously now have to stand by instead so you pay to build infrastructure that most of the time does nothing.
- As Hill then notes, this rises unevenly. Once you cross the Rubicon, these costs become immense. You need to keep significant reserves of gas on standby when wind and solar aren’t viable; you need to curtail wind power on exceptionally windy days but still pay them, and so on.
- Incredibly, according to Hill, even if gas prices fell to zero, our household bills would be higher in 2030 than before Russia invaded Ukraine. What a staggering statistic.
- What gives me a lot of hope is that this is now a live topic of debate. Contrary to quite a few pundits, who bemoan the breakdown in consensus and say we just need to get cross-party spirit, I think this is a far healthier state of affairs. Let the Greens and Liberal Democrats, with parts of Labour, continue to push for Net Zero. But now, let their plans be scrutinised, let the promises be checked, and allow the rhetoric from the Conservatives and Reform about the cost of energy be examined in turn. I prefer arguments to silence on a topic as important as this.
- Sam Olsen interviews Phillips O’Brien on how Churchill and Roosevelt understood warfare, and why we in the West have forgotten these lessons.
- In a nutshell, Churchill and Roosevelt understood war was about industrial production, rather than bravery and daring.
There is almost a boutique quality to German warfare, because although these were extraordinary weapons, they were complicated and expensive and could only be produced in relatively small numbers.
By contrast, Churchill and Roosevelt thought differently. They wanted good equipment, certainly, but fundamentally they wanted mass. Roosevelt’s attitude was effectively: I don’t know precisely what makes the perfect aircraft, but I want lots of very good aircraft, so I will provide the resources and let specialists work out how to build them.
- Ominously, O’Brien thinks the situation has reversed today, with the USA being closer to Germany, with spectacular but limited weapons, and China now the industrial giant. Furthermore, this situation cannot be salvaged once war starts, and has to be resolved now.
The first thing is production resilience. Do you have the supply chains, stockpiles and raw materials necessary to increase production if you need to?
If your entire war industry is based on rare earth metals controlled by China, then you have no war industry. You cannot fight China under those conditions. So governments need to do the serious work now to establish the foundations for wartime production.
- The UK right now seriously needs to be thinking about how to achieve this. We are seeing this right now in Ukraine, with high-tech Western weapons vs mass-produced Russian weapons with Chinese backing. Our saving grace is that the cost of inaction isn’t being borne by us, but we cannot risk this happening. This will necessitate difficult choices for government and the population, and we need to be talking about this more openly.
