Five of the Best

The top five comment pieces from today's papers

The Independent's Hamish McRae says that politicians must struggle to get the deficit under control before the next downturn in eight or ten years' time:

[C]orrecting the deficit is a race against time. We got through the downturn in the early 2000s in very good shape because our public finances were exceptionally strong when we went into it and public spending could, to some extent, offset slower private spending. We are doing badly this time because our finances were relatively weak. We don't want to face an even bigger catastrophe next time round.

In the Daily Telegraph, Irwin Stelzer writes that David Cameron continues to be alarmingly unclear about his economic policies:

[A]ll we know is that he plans to eliminate waste, and that he might go along with Labour's plan to raise the marginal tax rate to 50 per cent, but might not. He would like to cut benefits, but is not certain which ones -- or is not saying. He plans to extend parent choice, but is against vouchers. He might be planning green taxes, but we can't be sure. He does want to raise VAT, but might change his mind if the recession continues to bite and shopkeepers howl.

The Guardian's Jonathan Freedland warns that if Barack Obama can't win support for health-care reform there is no hope of the US reaching agreement on a new climate-change treaty. The greens and diplomats who hailed his victory may be disappointed:

They have seen a summer campaign demonise him as an amalgam of Stalin, Hitler and Big Brother, bent on sending America's frail grannies to their deaths in the name of a new socialism. If that's the response he gets when he suggests Americans should be covered even when they change jobs or get sick, imagine the monstering coming his way if he tells his compatriots they have to start cutting back on the 19 tonnes of CO2 each one of them emits per year (more than twice the amount belched out by the average Brit).

In the New York Times, Maureen Dowd says that the disciplining of Congressman Joe Wilson for calling Barack Obama a "liar" in Congress revealed a positive side to US politics:

It was a rare triumph for civility in a country that seems to have lost all sense of it -- from music arenas to tennis courts to political gatherings to hallowed halls -- and a ratification of an institution that has relied on strict codes of conduct for two centuries to prevent a breakdown of order.

The Times's Daniel Finkelstein argues that parties must broaden their membership to avoid the dangers of "group polarisation", under which individuals become more extreme as they deliberate with each other:

Group discussion among racially prejudiced people made them more prejudiced; the punitive damage awards of mock juries are higher than the median of individual jurors; a group of chess players was more inclined to a risky strategy than the individuals; a group of burglars became more cautious about the ease of breaking into a house than they would individually; protesters against police brutality became more supportive of violent action after group debate.

 

George Eaton is political editor of the New Statesman.

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Debunking Boris Johnson's claim that energy bills will be lower if we leave the EU

Why the Brexiteers' energy policy is less power to the people and more electric shock.

Boris Johnson and Michael Gove have promised that they will end VAT on domestic energy bills if the country votes to leave in the EU referendum. This would save Britain £2bn, or "over £60" per household, they claimed in The Sun this morning.

They are right that this is not something that could be done without leaving the Union. But is such a promise responsible? Might Brexit in fact cost us much more in increased energy bills than an end to VAT could ever hope to save? Quite probably.

Let’s do the maths...

In 2014, the latest year for which figures are available, the UK imported 46 per cent of our total energy supply. Over 20 other countries helped us keep our lights on, from Russian coal to Norwegian gas. And according to Energy Secretary Amber Rudd, this trend is only set to continue (regardless of the potential for domestic fracking), thanks to our declining reserves of North Sea gas and oil.


Click to enlarge.

The reliance on imports makes the UK highly vulnerable to fluctuations in the value of the pound: the lower its value, the more we have to pay for anything we import. This is a situation that could spell disaster in the case of a Brexit, with the Treasury estimating that a vote to leave could cause the pound to fall by 12 per cent.

So what does this mean for our energy bills? According to December’s figures from the Office of National Statistics, the average UK household spends £25.80 a week on gas, electricity and other fuels, which adds up to £35.7bn a year across the UK. And if roughly 45 per cent (£16.4bn) of that amount is based on imports, then a devaluation of the pound could cause their cost to rise 12 per cent – to £18.4bn.

This would represent a 5.6 per cent increase in our total spending on domestic energy, bringing the annual cost up to £37.7bn, and resulting in a £75 a year rise per average household. That’s £11 more than the Brexiteers have promised removing VAT would reduce bills by. 

This is a rough estimate – and adjustments would have to be made to account for the varying exchange rates of the countries we trade with, as well as the proportion of the energy imports that are allocated to domestic use – but it makes a start at holding Johnson and Gove’s latest figures to account.

Here are five other ways in which leaving the EU could risk soaring energy prices:

We would have less control over EU energy policy

A new report from Chatham House argues that the deeply integrated nature of the UK’s energy system means that we couldn’t simply switch-off the  relationship with the EU. “It would be neither possible nor desirable to ‘unplug’ the UK from Europe’s energy networks,” they argue. “A degree of continued adherence to EU market, environmental and governance rules would be inevitable.”

Exclusion from Europe’s Internal Energy Market could have a long-term negative impact

Secretary of State for Energy and Climate Change Amber Rudd said that a Brexit was likely to produce an “electric shock” for UK energy customers – with costs spiralling upwards “by at least half a billion pounds a year”. This claim was based on Vivid Economic’s report for the National Grid, which warned that if Britain was excluded from the IEM, the potential impact “could be up to £500m per year by the early 2020s”.

Brexit could make our energy supply less secure

Rudd has also stressed  the risks to energy security that a vote to Leave could entail. In a speech made last Thursday, she pointed her finger particularly in the direction of Vladamir Putin and his ability to bloc gas supplies to the UK: “As a bloc of 500 million people we have the power to force Putin’s hand. We can coordinate our response to a crisis.”

It could also choke investment into British energy infrastructure

£45bn was invested in Britain’s energy system from elsewhere in the EU in 2014. But the German industrial conglomerate Siemens, who makes hundreds of the turbines used the UK’s offshore windfarms, has warned that Brexit “could make the UK a less attractive place to do business”.

Petrol costs would also rise

The AA has warned that leaving the EU could cause petrol prices to rise by as much 19p a litre. That’s an extra £10 every time you fill up the family car. More cautious estimates, such as that from the RAC, still see pump prices rising by £2 per tank.

The EU is an invaluable ally in the fight against Climate Change

At a speech at a solar farm in Lincolnshire last Friday, Jeremy Corbyn argued that the need for co-orinated energy policy is now greater than ever “Climate change is one of the greatest fights of our generation and, at a time when the Government has scrapped funding for green projects, it is vital that we remain in the EU so we can keep accessing valuable funding streams to protect our environment.”

Corbyn’s statement builds upon those made by Green Party MEP, Keith Taylor, whose consultations with research groups have stressed the importance of maintaining the EU’s energy efficiency directive: “Outside the EU, the government’s zeal for deregulation will put a kibosh on the progress made on energy efficiency in Britain.”

India Bourke is the New Statesman's editorial assistant.