Energy prices are shooting through the roof, hitting both manufacturers and households, and contributing to a short-term crisis. Popular uproar about this offers a warning about the longer-term impact of measures to mitigate climate change, which will inevitably see still higher energy prices (and probably many other increases in the cost of living).
Government interference in energy markets has a long history, and a baleful one. In 2019, under Mrs May’s administration, Ofgem followed the urgings of the Labour Party and introduced a consumer tariff cap. This has led to huge losses in the face of rising wholesale energy prices, and the collapse of many smaller retail energy suppliers.
This experience is examined in a full-length article by IEA fellow and former electricity regulator Stephen Littlechild in the latest issue of Economic Affairs, the academic journal produced by the IEA and the Vinson Centre at the University of Buckingham, and which I edit.
Stephen argues that Ofgem and the Competition and Markets Authority misunderstand the nature of competition in energy markets. He offers some ideas about alternative policies the regulator should pursue.
Stephen’s article is one of many in this issue of the journal which will interest IEA supporters. They include a fascinating comparison by economic historian Professor Nick Crafts of the options facing Britain as we emerge from lockdown and those facing the Attlee government in 1945, a review of the evidence on the impact of gender quotas by researchers at Umea University in Sweden, a call for ending bank bailouts by Swedish financial regulator Pär Holmbäck Adelwald, and a lively discussion of ‘tax tyranny’ by former Mont Pelerin Society president Pascal Salin.
Economic Affairs was started by Arthur Seldon, and has appeared in various guises for over 40 years. It is currently published by Wiley, behind a paywall. Many IEA supporters will have been receiving free copies of the journal for some years. Unfortunately this is no longer possible as we enter into a new publishing contract with Wiley in the new year.
We will continue to offer at least one free-to-access article per issue via the IEA website. It is possible to subscribe to the whole journal by going to Wiley Online Library, and we hope that as many old readers and new readers as possible will take out subscriptions.
Professor Len Shackleton
IEA Editorial & Research Fellow
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THE MEANING OF COMPETITION
Are the tech giants too powerful? Does the dominance of Facebook, Google and other digital platforms threaten competition, innovation and consumer welfare?
These are just a couple of the questions explored at Thursday's conference on competition policy in the digital sector. The event was hosed at the IEA with the Information Technology and Innovation Foundation and marked the 75th anniversary of Friedrich Hayek's seminal lecture The Meaning of Competition.
The conference welcomed experts across the regulatory field, with keynote speeches from Chris Philp MP, Minister of State at the Department for Digital, Culture, Media and Sport, and Michael Grenfell, Executive Director of Enforcement at the Competition and Markets Authority. Michael's speech was posted on the government website, which you can read here.
You will be able to watch the different sessions on the IEA YouTube channel in the coming weeks.
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GOING GREEN
The first week of COP26 has drawn to a close, with world leaders announcing a number of new pledges to reduce our impact on the planet. These include commitments to tackle deforestation, reduce methane emissions, end the world's reliance on coal power, and invest in green finance.
IEA Director General Mark Littlewood wrote his fortnightly column for The Times on the need for leaders to focus on outcomes rather than politically-motivated targets. In particular, he made the case for a liberal, market-led strategy. Mark also discussed his column on Times Radio.
On the finance-themed day at the summit, Chancellor Rishi Sunak announced a ‘rewiring’ of the financial system, including plans to mandate UK firms to publish strategies on how they will meet climate commitments.
Quoted in City AM, IEA Chief Operating officer Andy Mayer argued that the plans would risk sealing off big corporates from competition by over regulating the sector.
Concerns have also been raised over the absence of leaders from high-emitting countries at the conference.
Quoted in The Sun on Sunday, Andy argued that Greta Thunberg and her followers – who have been protesting in Glasgow – would do well to reserve their pointed barbs for those doing real harm, like China, which continues to invest in more coal power than the rest of the world combined.
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DOES INFLATION MATTER?
The IEA has launched the Monetary Policy Essay Competition, in partnership with the Vinson Centre and the Institute of International Monetary Research. This year’s question is: Does inflation matter? And will the current inflation upturn be transitory or not?
The competition is open to sixth formers, undergraduates and postgraduates. The competition is also open to international students, but all entrants must be able to attend the final at the Vinson Centre in Buckingham. The deadline for applications is Friday 21st January 2022, and the final will be held in March 2022.
Submissions to the Budget Challenge are also open. Schools can enter teams of up to four students to put together a submission that will outline a budget with taxation and spending policy for the United Kingdom in the coming financial year. The deadline to submit is Friday 28th January 2022.
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iN THE MEDIA
Censorship online... It was reported this week that the Department for Digital, Culture, Media and Sport is planning to expand the scope of the Online Safety Bill to outlaw speech that causes ‘psychological harm’.
In a letter to the editor of The Telegraph, IEA Head of Cultural Affairs Marc Glendening said it is extraordinary that the government would give “free rein to proscribe potentially any perspective that challenges the illiberal 'woke' zeitgeist”.
Marc also wrote for Conservative Home on the proposals. He said that "for real liberals, the communication of an opinion, no matter how factually erroneous or offensive to some, can never constitute causing actual harm".
BBC Papers... IEA Director of Communications Annabel Denham appeared on BBC News to preview Wednesday's front pages.
The panel discussed the Chancellor's proposal to force companies to publish net zero action plans and our sluggish Covid booster rollout. You can catch up here.
Annabel also appeared on Sky News The View on Thursday morning.
Clock work...This week the clocks went back, which triggered the biannual debate as to whether we should scrap Daylight Saving's Time. In her weekly column for The Spectator, Annabel argued that there is a strong economic case for ditching the old habit of changing the clocks and keeping the day lighter for longer.
Covid watch... Headlines this week raised concerns over the apparent uptick in Covid cases. However, as IEA Head of Lifestyle Economics Christopher Snowdon noted, these statistics may have 'gilded the lily' slightly because of the time period used. His comments were quoted in the Daily Mail. Read more here.
Christopher also appeared on GB News this week to discuss the media’s reporting of Coronavirus infections, tobacco duty and proposed bans on e-cigarettes.
And, writing for the New Statesman, Christopher argued that despite pressures on the NHS, there is no strong case for either Plan B measures or a lockdown this winter.
Eat the rich... On Friday, Oxfam released a study on climate change and the rich. It claimed that the carbon footprints of the world's richest 1 per cent are set to be 30 times greater than the level compatible with the 1.5°C goal of the Paris Agreement on climate change. The charity called for governments to bring in measures to “constrain luxury carbon consumption like mega yachts, private jets and space travel".
IEA Editorial and Research Fellow Professor Len Shackleton argued that this "specious reasoning" sets a dangerous precedent for the state to interfere in private activities.
Len's comments were reported in the Daily Mail, ITV and across the regional press.
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IN CASE YOU MISSED IT
In the latest episode of The Swift Half with Snowdon, IEA Head of Lifestyle Economics Christopher Snowdon spoke to Telegraph columnist and parliamentary sketchwriter Madeline Grant. They discussed COP26, journalism and James Bond. Watch here.
IEA Podcast... After the Bank of England's decision not to raise interest rates, IEA Communications and Marketing Assistant Kieran Neild-Ali spoke to IEA Economics Fellow Julian Jessop about what this means for the UK economy, particularly against a backdrop of rising inflation and a cost of living crisis. Listen here.
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IEA PATREON
Thank you to all of you who have already signed up to become an IEA Online Patron. Becoming a Patron grants you VIP access to our latest videos, priority invites to our virtual events, and the opportunity to engage directly with IEA Director General Mark Littlewood and the IEA team. For just a small donation you can get all these benefits and more.
To visit the page and find out more about the IEA’s Patreon, follow the link here or watch our trailer here.
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YOU'RE INVITED
The IEA Book Club will to host an event with renowned British journalist, businessman and author Matt Ridley on his latest book Viral – The Search for the Origin of Covid-19.
This event is taking place on Wednesday, 17th November from 6pm at the IEA and will be chaired by IEA Director General Mark Littlewood. You can find out more here.
The IEA Book Club will also welcome Dr George Maher to discuss his latest book Pugnare – Economic Success and Failure on Monday, 29th November, 6-8pm. Find out more here.
On Tuesday 23rd November, the Institute of International Monetary Research will host Lord Mervyn King, economist and former Governor of the Bank of England at the Royal Automobile Club.
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WE ARE HIRING!
Our Communications team is looking for a new Digital Communications Manager to take on responsibility for our fantastic digital output. This year alone our YouTube channel has had over 2 million views. If you have a passion for free markets and experience using digital channels to engage audiences old and new, apply here!
Internships... Applications for our general internship programme are open. If you wish to apply for the Winter 2022 IEA Internship programme, running from 5th January to 1st April 2022, you must apply by 11:59 PM on Sunday 7th November 2021. Apply here.
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