From Institute of Economic Affairs <[email protected]>
Subject Green revolution?
Date November 22, 2020 8:59 AM
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* TALKING POINT, BY DR RICHARD WELLINGS
* GREEN REVOLUTION?
* PAY FREEZE BRITAIN
* YOUR CHANCE TO WIN!
* YOU'RE INVITED

The imposition of electric vehicles is a good example of how governments rig markets in pursuit of particular outcomes. Sadly, the UK is very far from being a free economy and many sectors are to a significant extent centrally planned. The consequences are obvious in transport, with policy driven by special interests and vast resources squandered on uneconomic projects.

The ban on sales of new petrol and diesel cars is likely to impose huge costs on consumers and taxpayers. The final bill could run into hundreds of billions of pounds.

Electric vehicles are still likely to be more expensive to buy in 2030 than conventional ones would have been. Poorer motorists could gradually be pushed off the roads, particularly if government-imposed road-pricing replaces fuel duty revenues and adds substantial installation and operating fees on top.

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Then there is the cost of upgrading the power grid and putting in vehicle charging points. Additional generating and storage capacity will also be required, including for those cold, still winter periods when demand is high and wind generation needs backing up.

Despite the scale of these outlays, it is clear that electric vehicles are no panacea when it comes to reducing pollution. Large amounts of energy are used in the manufacturing process. Mining the minerals and disposing of the batteries will also have major environmental costs. Emissions from this industry will remain significant for the foreseeable future.

In conclusion, ministers are forcing consumers and taxpayers to spend hundreds of billions of pounds on a policy that is likely to have relatively little impact on climate change and certainly won’t be a cost-effective way of addressing the issue. As usual, the politicians responsible will be long gone by the time things go badly wrong.

Dr Richard Wellings
Deputy Research Director and Head of Transport, Institute of Economic Affairs
GREEN REVOLUTION?

The government's 10-point green industrial plan was one of the topics up for debate on this week's episode of Live With Littlewood, which you can catch up on here ([link removed]) .

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IEA Senior Academic Fellow Professor Philip Booth argued that road pricing is "a good way to finance roads" but voiced concern that it might become "a cash cow" for the Treasury, while John Rentoul, Chief Political Commentator at The Independent, argued that road pricing is unlikely to happen anyway considering the political trade-offs.

Philip wrote ([link removed]) a letter to The Times ([link removed]) on the subject, in which he argued that the charges should vary according to levels of congestion, with drivers paying nothing at the quietest times. His comments also appeared in the Daily Mail ([link removed]) .

IEA Director General Mark Littlewood made the case for carbon pricing, criticising the government's "dirigiste approach". Quoted by The Telegraph ([link removed]) , he said that the government's £12bn pump-priming of the green revolution amounts to "an unsatisfactorily high £48,000 per job created" and that "we need to find a fair price for carbon" and then allow the market to find solutions.

As well as the Prime Minister's green plan, panellists discussed whether the lockdown will be over by Christmas, whether devolution has been a "disaster", and the prospect of lifting the Brexit deadlock. Catch up on the show here ([link removed]) .
PAY FREEZE BRITAIN

Ahead of the Spending Review next week, IEA staff responded to reports that the Treasury is planning a freeze on public sector pay, as well as the prospect of potential tax hikes.

IEA Economics Fellow Julian Jessop and Chief Operating Officer Andy Mayer went head to head on the IEA Blog ([link removed]) this week in a debate on whether public sector wages should be frozen to help pay for Covid. Andy argued that pay rises would be "tone-deaf" and "economically unwise" at a time when 10 per cent of the economy has effectively gone missing. On the other side of the debate, Julian argued that while public sector pay may well be in need of fundamental reform, now is not the time for "penny-pinching".

IEA Director General Mark Littlewood argued on BBC Radio 2's Jeremy Vine Show that this is the right decision considering the budget deficit this year is likely to be in the region of £400bn, twice the total public sector bill. Mark also appeared on the David Lammy show on LBC to give his point of view.

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IEA Editorial and Research Fellow Professor Len Shackleton appeared on BBC Radio 5 Live and talkRadio to discuss the potential freeze. Len argued that considering every one per cent increase on the public sector pay bill costs the taxpayer around £2bn, "it's reasonable at this time to expect some restraint". You can read Len's full press comment here ([link removed]) .

On the subject of tax rises, Julian Jessop argued that due to low borrowing costs, the Government should hold off on immediately rightening the finances. Considering "the threat of mass unemployment", Julian argued that we should wait for GDP to recover before raising taxes. His comments were featured in The Telegraph ([link removed]) .
YOUR CHANCE TO WIN!

*The Future of European Tax Competition Prize

Would you like to win €3000? Then enter The Future of European Tax Essay Competition to be in with the chance of nabbing the grand prize!

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EPiCENTER – the IEA’s network of European think tanks – is looking for new, innovative ideas on how tax regimes across Europe can become more competitive and driven by key liberal values of efficiency, neutrality, and fairness. Participants should answer one of the following questions:

1. What post-pandemic tax reforms should be implemented in the EU and across member states to encourage economic growth?

2. What are the building blocks of a successful tax policy that could be adopted by European countries? Explain what taxes should be determined on an EU level and why?

The competition deadline is 18th December and interested participants can register here ([link removed]) .

For more details, head to EiCENTER’s website ([link removed]) . Please address any queries to [email protected] (mailto:[email protected]) .

* The Budget Challenge and Monetary Policy Essay Prize

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The Budget Challenge ([link removed])

Teams of up to four A-level students can submit a Budget with taxation and spending policy for the UK in the coming financial year, as well as a brief analysis of the macroeconomic conditions with a broad policy and strategy response. There is a prize of £1,000 for the winning team and their school.
Deadline: Friday 29^th January 2021; please submit to [email protected] (mailto:[email protected])

Monetary Policy Essay Prize ([link removed])

Will the pandemic be inflationary or disinflationary? The understanding of how central banks make policy decisions is key to analyse a modern economy, particularly since the outbreak of the Global Financial Crisis in 2008/09.

This competition offers a unique opportunity to contribute to the better understanding of money and its role in the making of monetary policy. The Essay Prize is open to current Year 12 and Year 13 students as well as all Undergraduate and Postgraduate Students at UK universities. There are prizes up to £500.
Deadline: Monday 18^th January 2021; please submit to [email protected] (mailto:[email protected])
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YOU'RE INVITED

* IEA Book Club Webinar: Iain Dale on 'The Prime Ministers: 55 Leaders, 55 Authors, 300 Years of History'

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On Monday 23rd November at 12.30pm, the IEA Book Club will be hosting a webinar with renowned British broadcaster, political commentator and author, Iain Dale, who will be discussing his latest book 'The Prime Ministers: 55 Leaders, 55 Authors, 300 Years of History'. The event will be chaired by IEA Director General Mark Littlewood.

This event will be recorded on Zoom and live streamed onto the IEA's YouTube channel. IEA Book Club members will be invited to join the exclusive Zoom call and participate in the Q&A with Mark and Iain. If you would like to find out more information about the IEA Book Club, please contact us at [email protected] (mailto:[email protected]) .

* IEA Webinar: Is there a doctor in the house? Plugging the gaps in NHS staffing

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The NHS is facing an impending staffing crisis owing to a shortage of doctors. Mark Tovey, the author of a recent IEA report ([link removed]) titled "Is there a doctor in the house?", fears the NHS may be "sleepwalking into a perfect storm" and offers three simple solutions to this looming crisis. Will this be enough?

On Tuesday 24th November at 6pm, the IEA will host an webinar with Mark Tovey, Paul Bristow, Conservative Member of Parliament for Peterborough and member of the Health Select Committee, and Dr Kristian Niemietz, IEA Head of Political Economy and author of “ ([link removed]) Universal Healthcare Without the NHS” ([link removed]) .

You can register for the event here ([link removed]) .

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