Tuesday, 28 October 2014

Energy in the UK

Energy prices have risen every year since privatisation in 1990, when the beginning of the privatization of the Central Electricity Generating Board began. The assets of the CEGB were broken up into three new companies: Powergen, National Power and National Grid Company. Later, the nuclear component within National Power was removed and vested in another state-owned company called Nuclear Electric.

Energy prices have generally risen about 30% since 2010 and are likely to be at least 10% per year from now on, and yet today we are told to expect blackouts this winter.

If energy policy was as good at building power stations as it has been at closing them, we would not be facing the risk of targeted blackouts this winter. The plant retirement rate has simply outrun the replacement rate. That we are even talking about the possibility of blackouts is in itself a massive policy failure. Even if the lights don’t go out, wholesale prices will jump to uncompetitive levels and consumers and businesses will pick up the bill.

To prevent blackouts, you have to allow for the unexpected. Since the summer, two nuclear reactors have gone offline and three other plants at Ferrybridge, Ironbridge and Didcot B have had fires. Not only has 4.4 gigawatts now gone offline, more stress is put on the remaining fleet to perform at a higher level.

Paying businesses to cut their power use at peak times to keep the lights on is no way to run a modern economy. The test for this winter will not just be whether the lights stay on, but how much UK wholesale electricity prices diverge from our neighbours in France.

The UK energy market has been distorted by government intervention for too long and we may now pay the price in blackouts or brownouts – when major consumers of electricity are asked to shut down for short periods. Just as coal has become the cheapest fuel, the UK has been closing down coal stations, expanding renewable subsidies and effectively making low-carbon Combined Cycle Gas Turbines uneconomic by pushing them down the merit order and forcing them to operate intermittently.

Saturday, 18 October 2014

Deflation - what is it?

We know what inflation is:- noun

"the action of inflating something or the condition of being inflated"

specifically for economics:-
"a general increase in prices and fall in the purchasing value of money"


At present the "experts" are saying that the Euro zone is struggling with deflation, what is it and how does it affect us?

Definition:- "reduction of the general level of prices in an economy"


Well surely that should be good news, right? Most people are struggling with low pay, no pay rises, higher energy costs and other services, so how come deflation is raising it's head in Europe?

Prices are now rising at the slowest pace since the depths of the global downturn in October 2009, fuelling fears that the region is heading for a disastrous bout of deflation. A number of countries in the Euro zone are already suffering from deflation, including Italy and Spain as well as Greece, Slovenia and Slovakia, as the falling oil price, squeezed pay packets and weak demand take their toll.

Have you noticed in your local petrol station  how the price has been dropping over the past few weeks?

Deflation, or falling prices, can cripple economies because it makes debts harder to service and can lead to businesses and households putting off investment and spending, hitting corporate profits and costing jobs, and this is the reason why the Bank of England has suggested that the base rate will probably not rise from the 0.5% it has been at for the past six years.

Friday, 17 October 2014

Overpayment of Housing Benefit

Further to yesterday's blog, today's headline news is 26 billion pounds is being paid out in housing benefit, remarkably similar figures eh? Of course the government is putting it down to fraud by those nasty little low paid people!

Housing benefit is managed by both the department and local authorities. The DWP sets policy, entitlement rules and shares data and guidance with councils, which undertake day-to-day administration and pay claimants. Authorities then reclaim payments from the department.

Housing benefit goes to five million households on low incomes. Total payments in 2013-14 were £23.9bn. This included £900m in overpayments due to claimant error, £340m due to fraud and £150m due to errors by officials.

When the current population of low paid workers are finally given proper full time work as they were in before 2008, then this problem will solve itself.

Thursday, 16 October 2014

The Figures

Unemployment is down, again, below 2 million, the lowest for eight years, well let's take a look at the figures.

They claim that one million new jobs have been created over the past five years, these are 20 hour a week, £7.00 an hour jobs. They have replaced one million 40 hour a week, £32.00 an hour jobs.

The previous jobs taxed at 40% provided 26 billion pounds [40 * 32 * 52 * 1,000,000], the current jobs do not provide tax [20 * 7 * 52 * 1,000,000] as they are below the 10,500 bracket.

It was not enough to cheer investors however, with the FTSE 100 closing down 181 points or 2.8% at 6,211 – the biggest one-day fall since June 2013.

Despite the rise in UK employment, pay growth remained sluggish at 0.7% between June and August compared with a year earlier, prolonging the fall in real pay as wage growth continued to lag behind CPI inflation which was 1.5% in August and 1.2% in September. It was, however, a slight improvement on the 0.6% pay growth between May and July.

If the government are so keen on getting the countries deficit down, where are they going to get the income from?

Tuesday, 14 October 2014

Middle East update

Turkey has just attacked one of the UKs allies in Northern Syria!

Turkish F-16 and F-4 warplanes have bombed Kurdish PKK rebel targets in Hakkari province near the Iraqi border.

Last week Kurdish protests gripped Turkey's Kurdish-majority south-eastern provinces. At least 31 people died in widespread street clashes, as Kurds vented their anger at Turkey's passive policy over Kobane. The army imposed a curfew in some areas. But some of the fighting was reported to be between PKK supporters and Islamist Kurds sympathetic to IS. Inside Syria heavy fighting has been raging in Kobane since mid-September, as Syrian Kurds battle to defend the town against better-armed IS militants.

What happens now?

Sunday, 12 October 2014

British Politics

There is usually a protest vote at by-elections, and Ukip has been described as a pressure group, the sort that gets more votes at by-elections causing ripples in the community and making main parties stand up and take notice.

However, last week in Essex, the pressure group made an MP!

Is it a one-off? What happens if it is not a one-off? That is the more interesting question.

At the 2010 election no one party received an overall majority and we have a coalition. If Ukip get more MPs next May, the other parties will have to have less MPs themselves, so we might as well consign ourselves to being in a permanent coalition politically from now on, which means that all future decisions will be made by on a committee basis, and we know where that gets us!

Thursday, 9 October 2014

Middle East Politics

The heading should give you a clue that the following is just a rambling, because trying to get a handle on the situation that is currently happening in Iraq and Syria is far too complex to put in a few paragraphs.

Currently the West is putting pressure on Turkey to get stuck in, as it's powerful army is just sitting on the Syrian / Turkish border watching what happens. The Turkish Foreign Minister has said that it is not practical for Turkey to get stuck in.

Two reasons for this are they are not happy helping the Kurds because of past history and Assad's biggest enemy at present is the Islamic State, tricky!

Apparently there are now over fifty countries involved in this dispute / war, so good luck getting that lot to agree to anything...