I went on GB News on Thursday, just as the Prime Minister, Chancellor and Business Secretary were meeting with energy company bosses to try and devise ways of mitigating the impact of price rises on consumers’ bills. Gordon Brown has popped up to call for nationalisation of energy companies, although it’s not clear how he thinks nationalised providers would be able to buy energy more cheaply.

Similarly, those calling for an additional windfall tax, and even for eliminating the relief on the existing Energy Profits Levy for profits that are invested by oil and gas companies into additional extraction, surely need to explain how such measures would solve the main problem at hand – demand outstripping supply.

In a piece in today’s Sunday Telegraph, IEA fellow Stephen Littlechild explains how the energy price cap, originally intended to be a temporary measure, has ended up a hostage to fortune in the unforeseen supply shocks of the past 18 months. Littlechild makes some helpful recommendations, to both help the poorest households with their bills, and to incentivise investment and competition in the sector.

There are clearly no costless solutions, and there is a risk that instead of putting in place clear frameworks that will endure, and support investment and innovation for the long term, a combination of Net Zero ideology and reactive policy making could see the current problems become the new normal. I’ll be stocking up on candles and woolly jumpers for this winter.

Victoria Hewson
IEA Head of Regulatory Affairs

ASLEEP AT THE WHEEL?

With inflation on an upward trajectory, IEA Academic and Research Director James Forder reflected on the Bank of England's recent record, noting its lack of accountability and failure to keep inflation under control.



Writing for The Times, James suggested that there may be a need to review the Bank of England Act, which promised the Bank would be "accountable" and would benefit from its being “depoliticised” and “independent”.

James commented: "Consider the matter of accountability. It is a strained concept when those who supposedly are accountable cannot be removed from office. But one mechanism for it is that when inflation deviates from its target by more than 1 per cent, the governor is required to write to the chancellor to explain what went wrong. The outcome, though, has tended to be more of a love-in than a holding to account."



IEA Head of Lifestyle Economics Christopher Snowdon also gave his thoughts on the Bank's failure to keep inflation at the 2 per cent target and the professional ramifications the Bank's governor should face.

Quoted in the Daily Mail, Christopher stated: "If my only job was keeping inflation at 2 per cent but inflation was 9 per cent and I expected it to rise to 13 per cent, I'd like to think I would have the decency to resign, even if I was earning £575,000 a year".

iN THE MEDIA



Lend a hand... With energy bill projections rising further, IEA Energy Analyst Andy Mayer spoke to The Telegraph about how the government can help those struggling to pay energy bills. 

In terms of immediate support, Andy recommended against targeted support on bills. He noted that this would add "a layer of complexity to the welfare system which is very hard to reverse when prices fall again". Instead, the government could use the current system, through Universal Credit, to help support those struggling to pay their bills.



Grand theft energy... Matthew Lesh wrote for CapX on Don't Pay UK, a campaign to encourage consumers to opt out of paying for their energy bills. Matthew points out that not only does this over-simplify the energy crisis, but the movement also rests on the fallacy that high energy prices are caused by greedy corporations.

He concluded: "There is a case for further state support for vulnerable households. There is no case, however, for telling people to bury their heads in the sand."



Kill the bill... Matthew also wrote for The Telegraph about the controversial Online Safety Bill, highlighting the risk that the Bill, despite recent amendments, poses to freedom of speech.

Matthew noted: "The most worrying duties, perhaps counterintuitively, relate to illegal content. These will apply to all websites that allow user-to-user interactions, including the likes of Mumsnet and Change.org, or even WhatsApp and Telegram."



Waiting game... IEA Head of Political Economy Kristian Niemietz appeared on Talk TV to discuss NHS waiting lists. Kristian pointed out that, while the worst excesses of the backlog are starting to be cleared, waiting times of over a year have become the norm. Watch here.



Minimum unit palaver... Christopher Snowdon discussed the policy of minimum unit pricing on alcohol. Talking with Darren Grimes on GB News, Christopher noted that during its four years of implementation in Scotland, the policy only brought about a slight decline in overall alcohol consumption, and that there was no improvement among the heaviest drinkers. You can watch highlights here.



Nanny state hysteria... Christopher Snowdon joined Tom Slater and Joanna Williams on Spiked's Last Orders podcast. They had a fascinating discussion about topics ranging from Monkey Pox to the closure of the Tavistock Clinic. Listen here.



Cultural McCarthyism... IEA Head of Cultural Affairs Marc Glendening wrote for 1828 on a recent investigation by The Times that revealed universities are removing "problematic" literature from academic reading lists.

Marc noted that this is part of a wider attack on free speech from parts of the authoritarian left, and represents a serious threat to our basic civil liberties and once-liberal culture. Read here.

ON THE BLOG



Get cutting... In a piece for the IEA blog, IEA Head of Public Policy Matthew Lesh interrogated claims that tax cuts may have an inflationary effect and debunked some common misconceptions about the causes of inflation.

Commenting on whether tax cuts could impact monetary policy, Matthew said:

"The proposed tax cuts are unlikely to have a meaningful impact on the Bank’s decision making. Initial Bank of England analysis of the Government’s recent cost of living support package (costing over £15 billion) suggests that it could raise CPI inflation by just 0.1 percentage points. It is therefore unlikely that, in the context of inflation over 9%, the proposed tax cuts (costing around £30-£40 billion) would be the cause of monetary tightening."



Dental deficit... IEA Editorial and Research Fellow Len Shackleton also wrote for the IEA blog on the current shortage of NHS dentists, noting the deficiencies of central planning. He wrote:

"The number of dentists trained is inadequate. It is set by the government. This September English universities (other parts of the UK have their own arrangements) will be allowed to recruit just 766 dental students."

Len argued that the solution is to remove the cap on student dentists and allow market forces to flourish:

"We need to expand our dental training places substantially, by abandoning the cap on student numbers...A switch to such a system would recognise the inadequacy of the current set-up for dental care, and turn supplicant patients into active consumers for dentists to woo rather than turn away with a shrug. If successful, it could well serve as a template for wider changes in the provision of many NHS services."

CALLING ALL STUDENTS!

The IEA's Oxbridge Training Day is fast approaching. The event will be held at the IEA office in Westminster and will take place on 21 September 2022 from 1.30–4pm. The event is free to attend and participants may join virtually or in-person. For more details on the event, and how to attend, click here.



The November Teacher Seminar is also being hosted at the IEA office. The event will include presentations from IEA researchers on issues related to the academic syllabus. The focus will be on the history of economic thought, whether forecasting makes sense, and the history of the government debt crisis.

The event will take place on 2 November 2022 from 10am–3.30pm. You can find more information on how to sign up here.