Gas Prices

[BobG]

I'm starting to wonder if we are witnessing the beginning of the end of Thatcherite free market Capitalism? The grounds for complaint are multiplying at an increasingly rapid rate. What you might call the 'philosophical climate' seems to be starting to change. The risks and dangers of continued unfettered free market Capitalism are stark - and the evidence, all over the world, grows day by day.

I'm  not suggesting Thatcherism is dead. Far from it. But it is under more pressure now than it has ever been before. And that pressure is continuing to grow.

BobG

[BillyStubbsTears]

Bob.

We've had three economic crises in the past 15 years, each one of which has been far more severe than anything else since the War.

In every case, the Free Market has been entirely out of its depth, or a cause of the problem. In each one, the Govt has had to step in to prevent disaster, pouring money into the economy on a scale never seen outside war.

At some point, this level of Govt intervention has to be seen for what it is. It's a sign that in the challenges that have faced us so far this century, unfettered free market capitalism has been nowhere near up to the task.

I think it's time we addressed that, rather than stumble on to the next crisis.

[BobG]

I agree Billy. I was suggesting that perhaps the tide of time has now reached slack water. Without an inspired free market leader in sight I am now wondering if we are watching the tide starting to turn? If it is, then your wish may be starting to come true

BobG.

[River Don]

I think what it is, and this is not just a UK thing, is the economy is just not growing at the rates they expect. Not for more than a decade.

Capitalism works when the tide is rising, lifting all ships.

[BillyStubbsTears]

Thing is RD, the tide rose a LOT under Thatcher. But it didn't lift the poorest 25%'s boats.

[BillyStubbsTears]

New prices/kWh under Truss's cap plan announced.

https://mobile.twitter.com/theheatinghub/status/1568491558365806593

Note, this doesn't include the standing charge which is about £0.50 per day for each of gas and electric.

[ncRover]

I'm starting to wonder if we are witnessing the beginning of the end of Thatcherite free market Capitalism? The grounds for complaint are multiplying at an increasingly rapid rate. What you might call the 'philosophical climate' seems to be starting to change. The risks and dangers of continued unfettered free market Capitalism are stark - and the evidence, all over the world, grows day by day.

I'm  not suggesting Thatcherism is dead. Far from it. But it is under more pressure now than it has ever been before. And that pressure is continuing to grow.

BobG

The free market has enabled the biggest growth in world population and living standards in human history.

[BillyStubbsTears]

There are "free markets" and "free markets".

The mechanisms that transformed Germany after the war, never mind Japan, or South Korea or China more recently, are a long, long way removed from Thatcher's model of a free market.

You can call for the end of the Thatcherite model without wanting to embrace Maoism.

[BobG]

And I wasn't calling for the end of anything. nc seems to have misread what I wrote. I made an observation, a hypothesis, from observing current events. It may be right or it may be wrong. I made no judgements nor called.for no actions. Commentary is exactly that. Intelligent analysis.

BobG

[ncRover]

And I wasn't calling for the end of anything. nc seems to have misread what I wrote. I made an observation, a hypothesis, from observing current events. It may be right or it may be wrong. I made no judgements nor called.for no actions. Commentary is exactly that. Intelligent analysis.

BobG

Ok Bob, I didn’t mean to sound argumentative. I was just putting a point out there for discussion.  I think that over the last 3 years the economic model has had strain on it from external factors and our reaction to one of those.

If we zoom out and look at the bigger picture, people will see the overall success. We take a lot for granted.

https://www.humanprogress.org/dataset/people-living-in-extreme-poverty/

Also, the Russian army seem to be struggling…

[drfchound]

And I wasn't calling for the end of anything. nc seems to have misread what I wrote. I made an observation, a hypothesis, from observing current events. It may be right or it may be wrong. I made no judgements nor called.for no actions. Commentary is exactly that. Intelligent analysis.

BobG

Ok Bob, I didn’t mean to sound argumentative. I was just putting a point out there for discussion.  I think that over the last 3 years the economic model has had strain on it from external factors and our reaction to one of those.

If we zoom out and look at the bigger picture, people will see the overall success. We take a lot for granted.

https://www.humanprogress.org/dataset/people-living-in-extreme-poverty/

Also, the Russian army seem to be struggling…

IMO, the best line on this whole thread, “we take a lot for granted”.
Possibly the best line on the whole forum.

[IDM]

I used to take university funding for granted...

[ncRover]

I used to take university funding for granted...

I’m not sticking up for one political party’s policies versus the other, I’m sticking up for the economic system as a whole.

Blair’s Labour was capitalist.

[BillyStubbsTears]

And I wasn't calling for the end of anything. nc seems to have misread what I wrote. I made an observation, a hypothesis, from observing current events. It may be right or it may be wrong. I made no judgements nor called.for no actions. Commentary is exactly that. Intelligent analysis.

BobG

Ok Bob, I didn’t mean to sound argumentative. I was just putting a point out there for discussion.  I think that over the last 3 years the economic model has had strain on it from external factors and our reaction to one of those.

If we zoom out and look at the bigger picture, people will see the overall success. We take a lot for granted.

https://www.humanprogress.org/dataset/people-living-in-extreme-poverty/

Also, the Russian army seem to be struggling…

I'm a socialist but I agree that capitalism has been very successful in raising average living standards.

But as I say, there are many different forms of capitalism.

Since the start of the 20th century, we've been through 3 big phases.

Up to 1940, the philosophy was to keep Govt out of the economy. Let the market decide. Make sure the Treasury balanced the books.

From 1940 to 1980 was a period of major intervention. Nationalisation. Strong Trade Union power. Government spending on a large scale. Still a market economy but with a lot of the freedoms curtailed. Keynesian economics ruling the roost with Govt intervening to direct the economy.

1980-? An attempt to revert to pre War conditions. Privatisation. Curbing the unions. Giving business the power to make decisions. Govt spending massively reduced (until a series of events meant it had to be massively increased). The cherry on the cake being Austerity that took us right back to the 1920s, like Keynes had never existed.

The record shows that, as far as ordinary people's living standards are concerned, the 1940-1980 period is a hands down winner. And the Austerity decade has been particuy cataclysmically bad.

https://mobile.twitter.com/darioperkins/status/1567903416382357504

[glosterred]

New prices/kWh under Truss's cap plan announced.

https://mobile.twitter.com/theheatinghub/status/1568491558365806593

Note, this doesn't include the standing charge which is about £0.50 per day for each of gas and electric.

Standing charge now and from the 1st October

https://www.ofgem.gov.uk/check-if-energy-price-cap-affects-you

[IDM]

I used to take university funding for granted...

I’m not sticking up for one political party’s policies versus the other, I’m sticking up for the economic system as a whole.

Blair’s Labour was capitalist.

University/grants..  it was a play on words..

[BillyStubbsTears]

New prices/kWh under Truss's cap plan announced.

https://mobile.twitter.com/theheatinghub/status/1568491558365806593

Note, this doesn't include the standing charge which is about £0.50 per day for each of gas and electric.

Standing charge now and from the 1st October

https://www.ofgem.gov.uk/check-if-energy-price-cap-affects-you

Those were the OFGEM figures before the latest Govt cap. But I'd expect the standing charge to be more or less that.

[albie]

We will not know for sure until the mini budget from Kwarteng.

The EU are in discussions to reform electricity markets, breaking the link of leccy consumer costs to wholesale gas prices.
In the UK, we have a consultation running until Oct 12......after that, the mini budget will set out how the UK intends to address the same question.

Most unlikely that the UK will have a different architecture to the EU, because the systems are entwined, and need to be interoperable.

[IDM]

We need to know what the new cap cost per unit used of gas and electricity will be, before the end of September as they come into place on 1 Oct.?

[BillyStubbsTears]

We need to know what the new cap cost per unit used of gas and electricity will be, before the end of September as they come into place on 1 Oct.?

https://www.drfc-vsc.co.uk/index.php?topic=283843.msg1185750#msg1185750

[IDM]

I saw that - is it official.?

That’s a 21% rise in the electricity cap, and 41% up in the gas cap.  If the “typical” household cap is going up from just under £2000 to £2500, how does that add up?  Unless we use proportional less gas?

[BillyStubbsTears]

Average usage is 12000kWh gas, 2900kWh electric.

Current tariffs are 7p gas, 28p electric. And about 75p/day standing charge.

That tots up to £1925.

With the new tariffs (10.3p and 34p) and the same standing charge, that will be £2495.

[River Don]

Electric is too expensive. The UK needs to follow the EU and reform that.

And the standing charge is completely unfair. High users should pay more.

[Branton Red]

I was interested to work out given the £400 rebate all households are getting on their energy bills at what level of usage would a household be paying less than this summer's rates under the Government's policy.

Based on 75p per day standing charge - but an increase from £1,971 to £2,500 on the average bill as per the BBC.

This would be anybody with energy usage 21% or more below average. Which will cover people in flats and smaller houses.

Conversely the higher your energy usage the bigger the % you'll see your costs increase. So the average bill is up 6.5% but a household with double the average usage will see their bill increase 19% i.e. a large detached house.

Therefore, though I strongly disagree with how this is being funded, I actually quite like the progressive nature of the mechanism it's being delivered through esp adding on the £650 benefit to the very poorest households.

The £400 rebate is crucial to this progressiveness though - let's see if it's repeated in year 2 of the policy.

[BillyStubbsTears]

Branton.

The cap his very, very regressive though. It benefits people with high energy usage (i.e. wealthy people) far, far more than it benefits low usage people.

And that's only a part of the story. Truss says she will rescind the NI rise. That will also massively benefit high earners.

(To be honest, I did criticise the NI rise as regressive when Sunak introduced it. I was wrong. I thought that, like normal NI, it didn't apply after about £50k income, so wouldn't be affecting the very highest paid. I was wrong. It applied across the income range and therefore was very progressive. Cutting it is extremely regressive.

[Branton Red]

Branton.

The cap his very, very regressive though. It benefits people with high energy usage (i.e. wealthy people) far, far more than it benefits low usage people.

And that's only a part of the story. Truss says she will rescind the NI rise. That will also massively benefit high earners.

(To be honest, I did criticise the NI rise as regressive when Sunak introduced it. I was wrong. I thought that, like normal NI, it didn't apply after about £50k income, so wouldn't be affecting the very highest paid. I was wrong. It applied across the income range and therefore was very progressive. Cutting it is extremely regressive.

Billy

Let's just stick to the energy cap

Can you explain how the cap is very regressive? I agree it would be without the £400 additional rebate for all.

Here's my workings: -

£1,200 cost now will save 9.3%; 63.5% if eligible for the £650 benefit

£1,557 cost now will be cost neutral; save 41.8% if eligible for £650 benefit. i.e anyone with a current bill below this figure will save money

£1,971 (average) cost now bill will rise 6.5%

£2,400 cost now bill will rise 11.0%

£3,942 (double average) cost now bill will rise 18.9%

So the mechanism itself, including the £400 rebate for all, is surely progressive in nature?

[BillyStubbsTears]

You are right in terms of bald percentages. But that is, if I may say so, simplistic

What really matters is what someone is left having to pay out of their disposable income.

Someone in average earnings, paying the average amount for fuel will see their bill rise by £1000 over last year's figure (£2500 now as opposed to £1100 last year with £400 rebate). That's about 4% of average national gross salary.

Someone earning £100k per year a using double the average fuel will see their bill rise from £2200 to £5000, so a £2400 increase after the £400 rebate. 2.4% of their gross income.

But the real effect is on disposable salary. Someone on average pay is going to struggle to find a spare £1000. Someone on £100k shouldn't have to tighten their belt too much to find £2400.

For one, it means cuts to the bone. For the other, perhaps delaying the new car or a less lavish holiday. Or dipping into savings

And as I say, you cannot look at this in isolation. The NI cut will massively skew these numbers in favour of the wealthy.

If the money for that cut is available (and I don't actually think it is, without borrowing it against future public services cuts) then use it to increase the protection of the poorer half of the population.

[SydneyRover]

On a wider issue, there is plenty of energy and plenty of money (6th wealthiest country) it's the distribution of it, how the problems of today are dealt with and what is left for the next few generations to clean up.

A motherhood statement maybe but extremely important along with a government capable of delivering for the country rather than concern for self survival. I interpret Centrica's moves as looking to head off moves to pubic ownership, good signs but not a permanent fix, where is the rest of the cavalry?

[IDM]

I just put the new cap rates into a calculation based upon our suppliers estimate of our annual KWH usages.  Works out as a 30% rise, about £800.

At the last rise in April our DD went up by £75 a month but using next to no gas all summer means we are about £900 in credit.  Add on the £400 rebate means the DD shouldn’t increase from October..

Still stupidly high though..

[ncRover]

I see the fracking ban has been lifted. Hopefully that will see a reduction in costs in the coming years and make us more energy secure as a nation.