In this article, I discuss a response to the problems inherent in the current hyper-partisan political atmosphere by looking at Labour’s energy policy, the reasons why the Tories are in direct and complete opposition to it, and how adopting a much less extreme version of it might benefit a party such as the Lib Dems.
I should say that I started writing this before I was aware that all of the parties were going to release their manifestos in this last week. I still think that what follows is a good conversation starter. I hope to get the time to do a little analysis of the manifestos before the election, but we’ll have to wait and see.
For anyone not aware, the title of the post is a reference to a track by Tubeway Army/Gary Numan from 1979.
Photo by Diz Play via Unsplash
Hyper-partisan politics
With the hyper-partisanship of modern politics, it seems increasingly unlikely that politicians will be able to agree that someone from an opposing party has said or done something good or useful, much less that an opposing party’s policy is a good one. This is increasingly true in countries that are restricted to two parties or two major parties.
In the UK, we have the relative good fortune to have a number of parties, and not just because of the SNP and Plaid Cymru. I am talking about the Lib-Dems and the Greens; I do not count single-issue parties such as The Brexit Party, and UKIP is all but dead.
For those outside of the UK, SNP and Plaid Cymru are Scottish and Welsh, respectively, standing no candidates in English electorates. So, whilst they have power in parliament, they cannot ever win enough seats to govern outright, even in coalition with each other. There is an outside chance that the Lib Dems could govern, but almost definitely in coalition. The Greens could not, but their usual one seat could be useful for a centre/centre-left party in need of an extra seat in a coalition or in a confidence-and-supply arrangement.
In a two-party system, the act of attempting to reach out to the other party is often made out to be appeasement (and thus to be avoided) by many (and increasingly more) on the right, and is thus (now) seen as a waste of time by most on the left. This is how we get to hyper-partisanship. With a third party inhabiting the centre ground, as the Lib Dems do in the UK, there is the opportunity to borrow policies liberally (or conservatively). Indeed, in the current round of election promises, it has been noted that the Tories have reheated a lot of what Labour offered at the last election in an attempt to seize the middle ground, albeit as a means to bribe pro-Leave Labour voters (with no surety that any such promises will be followed). For myself, when the Tories were more narrowly centre-right (under Cameron), they had a number of credible policies (most especially the so-called “Northern Powerhouse”), so borrowing from them as a centrist or centre-left party would be perfectly reasonable and acceptable.
I want to suggest that there is a Labour policy that draws much scorn from the far right and is not well liked by the centre-right but that could, nevertheless, enthuse more undecided voters if presented in a more moderate form. Additionally, the strategy of adopting and moderating policies from both parties could be a very strong undecided-voter-gaining tactic for a centrist party.
Nationalisation
One of the primary ideological battlegrounds in UK elections is the NHS, the nationalised and thoroughly socialist health service. It’s a battleground because everyone recognises its value but, because of the socialist element, it’s a far more natural thing for Labour to be championing.
The Tories, on the one hand, aren’t keen to change something that is perceived to work, especially if it has a heaping helping of tradition and British identity associated with it – one need only look at the NHS portion of the London Olympic opening ceremony to see that the NHS puts large ticks in both of those boxes. On the other hand (and the other wing of the party) they are the self-styled party of business, so the opportunities that the NHS represents are many and varied.
The problem for the party of business is that health is an example of inelastic demand, which is to say that health is so fundamental to survival that people will bankrupt themselves to retain it, as the American experiment has shown us. Strictly speaking, so are food and energy, along with many other needs. However, in the case of food, it is more cost-effective for a government to provide social support to the needy than it is to nationalise food supply. However, the current government is failing to properly fund this, thus socialised food, in the form of food banks, are increasingly relied upon by increasing numbers of families.
Inelastic demand is when people buy about the same amount whether the price drops or rises.
Is energy more like food or more like health?
Health is so inelastic, so fundamentally necessary for those that need support when they need support, that it makes sense to socialise it. The issue of fuel poverty (where a person pays more than 10% of their income for energy) is primarily an issue for the elderly and infirm as their incomes are low and often government-sourced (pensions and health-related welfare income). However, it is a distinct question from the health question.
Labour’s answer to the energy question is a reflexive “nationalise it”. The Tories’ response to Labour is a reflexive “No!”, but that was their answer when the idea of the NHS was first floated, too (although it was also opposed by some Labour MPs and many health professionals). Some of the modern reasons will be spurious, sophist, post hoc rationalisations – as most “reasons” to do (or not do) something in line with a given ideology are – and just as some reasons to nationalise it are. However, I’m not interested in going into the deep ideological differences so much as recognising that they exist and crafting a response to the problem itself rather than the ideologies.
It is a truism that both sides in any polarised debate will have some merit, whether in the way the problem is articulated or the proposed solution. As such, the ultimate solution (to the problem that both sides recognise exists) will likely be somewhere between the two extremes. In a two party system you often get the two extremes (or as extreme as will be acceptable to a majority on that side) but seldom the middle ground (even if the moderates of both parties would espouse that middle ground approach), this is known as Risky Shift and is an inherent problem in party politics.
Labour sees the problem of moderate inelasticity of demand for electricity (and gas) as a justification for nationalising it. I say “moderate” inelasticity because the UK’s energy usage has actually been declining for over a decade and it is probable that this decline has driven the unit price up, rather than vice versa. The Tories, as was the case with the original founding of the NHS, are against nationalising it, despite these issues of profitability and price that have knock-on effects for social policy and related budgets. This is possibly because, unlike the NHS, the Tories were responsible for the privatisation of the energy sector in the first place, so any move to re-nationalise will be seen as a strong repudiation of a central tenet of Conservative policy.
The UK Energy Market
The problem with this nationalise/privatise argument is that it is a false dilemma. As with all false dilemmas, the problem is portrayed in essentialist terms by the two loudest voices and all of the nuance is ignored. So let’s look at some of the nuance in the energy sector:
- The Thatcher government privatised British Gas in 1989 (thereby creating a monopoly) and privatised the electricity boards starting in 1990.
- The first challenger energy supplier to launch was Ecotricity, in 1995. As it happens, they were also the world’s first 100% sustainable supplier.
- It is only over the last two or three years that the big six energy companies (created by privatising British Gas and the five electricity boards) have slipped from 95% to 78% market share. So market forces took almost 30 years to have any real impact.
- 15 energy companies have failed since the start of 2018, affecting over a million customers and costing the taxpayer many millions of pounds in guaranteeing supply and consumer credit with these businesses. In fact, this amount is said to be around £80 million.
- Ofgem (Office of Gas and Electricity Markets) policy is to assign a supplier of last resort which inherits all of the consumer accounts (and debts) when a supplier fails.
- The now defunct Cardiff Energy Supply was set-up to attempt to tackle the fact that households with pre-pay metres (generally low socio-economic households) pay around 40% more for their energy than people on direct debit contracts.
- There are two energy companies that are run by local councils: Robin Hood Energy and Bristol Energy. However, Robin Hood Energy supplies a further nine council-backed companies, so the number of council-based suppliers is actually 11:
- Angelic Energy – Islington Council
- Beam Energy – Barking and Dagenham Council
- Bristol Energy – Bristol City Council
- CitizEN Energy – Southampton City Council/neighbour councils
- Fosse Energy – Leicestershire County & Leicester City Councils
- Great North Energy – Doncaster Council & Barnsley MBC
- The Leccy – Liverpool City Council
- RAM Energy – Derby City Council
- Robin Hood Energy – Sheffield City Council
- White Rose Energy – Leeds City Council
- Your Energy Sussex – West Sussex County Council & local authorities
These council-owned suppliers illustrate the point that councils see value in running an energy supply company, even if at a loss, because the benefits to the community are reduced costs in other areas. However, despite that raison d’être, Robin Hood Energy is now profitable after 4 years of trading (primarily by virtue of supplying to those nine other councils).
As we can see, a lot of detail is lost when looking only at the two most extreme solutions to the problem. In addition, by the law of unintended consequences, it is highly unlikely that the current state of affairs was foreseen by the Thatcher government, not least because of the impact of decisions by subsequent governments and by Ofgem itself. Labour’s intention to go back to how it was, pre-1989, seems like quite a conservative move, until you realise that they’re undoing privatisation which, itself, was a backwards leap to feudalism (albeit corporate- or neo-feudalism). However, despite it being an attempt to ‘reset to last known good configuration’ the world in which such a move is taking place is vastly different to the world in which that configuration last existed. So, again, the law of unintended consequences must be borne in mind. The problem with all of this is that detail is not generally an election-winning strategy, but let’s give it a go.
A workable energy policy
A middle ground approach to energy policy that does better than the policies of both major parties, given the above nuance, would be as follows:
- The government, following the lead of those 11 local councils, creates its own energy company which it runs like a business, but explicitly like a not-for-profit social enterprise business, i.e. it reinvests the profit back into its own operation (as Sheffield Council’s Robin Hood Energy now does). I will call this government energy supplier Governegy for ease.
- Governegy could easily become the primary supplier to those 11 local councils because their reasons for existing are aligned and because that initial volume would stand Governegy in good stead.
- Governegy becomes the default supplier of last resort for Ofgem – meaning that any failed energy supplier’s customers are reverted to them. (This would be the only “unfair advantage” that the company would have over any other company in the market.) With six collapses predicted for this winter, Governegy would find itself with several thousand customers fairly quickly. This should also reduce the admin costs associated with the ‘supplier of last resort’ process, both because of the bidding process currently associated with it, and because this would behave like any other government guarantee arrangement.
- As with any ‘supplier of last resort’ arrangement, once the handover to Governegy is complete, the consumer has the opportunity to switch to a competing supplier if they so choose. Equally, consumers would have the ability to switch to Governegy.
- Running an actual energy business, rather than merely another government department, has the benefit of moving away from the complaints about the dire state of (and lack of business acumen in) government-run departments, due to the lack of profit-motive to concentrate the mind (according to some).
- Governegy would be a valuable source of data and experience for policy-making.
Of course, this idea is not new. My expression of it here owes a bit to Richard Carrier; he outlines the idea of self-funding government agencies in ‘Sense and Goodness without God’ (note: the link is to the highest-rated bookseller on Ethical Consumer that had it in stock). The idea also addresses a number of issues relating to the UK energy market, because I have been researching it for the last three years. Finally, the idea is so ‘not new’ that EDF, one of the largest suppliers in the UK, is actually a subsidiary of Électricité de France, majority owned by the French state.
In closing
My intent with this approach was two-fold:
- Small steps addressing specific problems that do not overtly move in either direction, but instead address the problems of both, should actually be the role of government, a role which hyper-partisanship makes all but impossible;
- Large ideological leaps are seldom without risk, and are seldom appetising to opposition voters, leading to long-standing stalemates and least-bad rather than best-practice policy-making.
I’m interested to know what UK-based people of all political persuasions think of this idea of a government-owned energy company that competes with the other energy companies, in particular, but also about the idea of a party openly taking and moderating other parties’ policies. Would such policies move you towards a more centrist vote, such as Lib-Dem? If Labour or the Tories adopted this policy, would that make you more likely to vote for them?