Beginning to See the Light: There is a Light That Never Goes Out 

 

‘To die by your side 

Is such a heavenly way to die’ 

 
If timing is everything in life, I filed it 6-hours too early, and therefore am late commenting on history . On the plus side this has given me time to reflect on the passing of our late Queen. 

I am not a monarchist, but I can recognise a job well done. The Queen did a difficult job and did it well. She conducted herself graciously, honestly, and above all cared for her people. I refuse to use the word ‘subject’, I am no one’s subject. 

The traits she demonstrated are, sadly, lacking in recent governments. Their behaviour is anything but gracious, honesty is an optional extra, lies are only damning if found out, and even then it’s debateable. Have recent governments cared about the people? No, they care only for themselves and clinging on to power.  

Our late Queen did a difficult job and did it well, her governments also do a difficult job too, but they do it badly. 
 

‘She conducted herself graciously, honestly, and above all cared for her people’

 
The Tory party in-power when the Queen ascended the throne was very different to today’s version of free-marketers and nationalism rather than imperialism, who care little for church or constitution.  

Brexit was, and still is their god, which explains why none were remotely concerned when, as PM, Johnson ‘lied to the Queen’ when he tried to prorogue parliament. 

Today’s Conservative party has left behind is no longer the royal party, the party of national capitalism, and of a genuine union. The party may have increased its share of the vote in general election since 1997, but, at the same time, it has become an English party appealing to a dying electorate, a failing Brexit, and a powerful radical right. Unless they are able to change course they will become increasingly irrelevant and, like, the dinosaurs extinct.   

To conclude, if one phrase summed up the Queen it would be that ‘she cared’. 

Care also isn’t a term that applies to Southern Water who, like the governments care only about themselves. 

The supplier, which was given the lowest one star rating for performance by the Environment Agency, is threatening to use debt collection agencies against customers involved in a payment boycott as they protest against continuing raw sewage discharges. 
 

‘customers involved in a payment boycott as they protest against continuing raw sewage discharges’

 
Southern was fined £90m in 2021 for dumping billions of litres of raw sewage into the sea around Whitstable and the Hampshire coast. 

Mr Justice Jeremy Johnson, sentencing the privatised water company at Canterbury crown court, said the offences showed a shocking and wholesale disregard for the environment. The water company is still under a criminal investigation over the discharges by the Environment Agency.   

This typifies the way the government allows big corporations to continue doing what suits them. They dump shit on us and treat their customers like shit. 

This is small government in action, or, more accurately inaction. Doing nothing because they don’t care! 

Does Truss really care? No: she just bends with the wind, keeping one eye on the party’s loony right who are the power behind her throne. She stuts around making vainglorious statements and then doing the opposite, how can anyone have faith in her to contribute anything of substance. 

The cost-of-living crisis dwarfs her. Despite her Thatcherite posturing, Covid has shown that markets are no longer sacrosanct. Her government has already had to impose price controls to curb soaring energy bills at a cost of £100bn+, and with electricity rationing is still a possibility.  
 

‘She stuts around making vainglorious statements and then doing the opposite’

 
The Tory’s are ideologically distressed, forced by events to desert lean budgets with tax increases to balance them.  Truss continues to promises across-the-board tax cuts, which will disproportionately benefit the rich, but where the money come from? 

She is a Margaret Thatcher tribute act, replete with pussy-cat bow, who, like her idol,  takes office with inflation as a priority. Is there a difference? Yes, firstly although the symptoms are the same this illness is different. Last time around Thatcher reduced the budget deficit by raising taxes, not cutting them, at the cost of high unemployment. 

The Johnson diversion was one of political alchemy, which created an alliance of fiscally responsible Tory voters and ‘red wall’ constituencies who are the polar opposite,  requiring high spending and therefore higher taxes. Truss is now preaching a return to ‘supply-side’ economics based on lower taxes automatically bringing growth, a message popular with party activists but few others. 

Her proposal to deal with the energy crisis is borne out of necessity and represent fiscal policy being used to stabilise the economy in-place of central banks  

What hasn’t changed is the continual posturing, the continuation of the culture wars and union-bashing. Once again, they are offering scapegoats to inflame the electorate rather than facing up to the disaster they have created. 

Truss is just the latest in a line of Thatcherites, championing failed policies where economic growth  was based on rent-seeking via privatisation, the housing market and maximising the City’s speculative activities.  

It is these loony right libertarians who continue to control our destiny. Truss, may have flip-flopped from being anti-‘handouts’ to launching one of the biggest in our history, but this is simply buying time to implement her wider programmes, which otherwise risked being washed away on a tide of public dissent. 

The first sign of this bigger agenda was the chancellor Kwasi Kwarteng’s sacking of Sir Tom Scholar as permanent secretary to the Treasury. Kwarteng explained this  by saying he blamed ‘the same old economic managerialism’ for leaving Britain ‘with a stagnating economy and anaemic growth’. 

Kwarteng wants ‘bold action,’ to replace this ‘toxic combination’: ‘Cutting taxes, putting money back into people’s pockets and unshackling our businesses from burdensome taxes and unsuitable regulations.’ Or, a return to ‘supply-side’ economics. 
 

‘The proposal effectively subsidises the companies that have profited from the energy crisis, while we foot the bill’

 
Her proposal is little different to that advocated by Labour, the one she derided in previous weeks. The difference is in the implementation 

 

The government’s proposal caps household energy bills at £2,500 a year until 2024. This, together with an additional 6-months’ relief for business and the public sector, is estimated to cost up to £200bn. 

On the plus side the 2-year £2,500 price cap will save millions of people from drowning in debt, and will also lower the peak inflation rate by C.4%. in turn this reduces our debt service costs by C.£20bn p.a..(1). In addition it will help to avert the risk of a dangerous wage price spiral.  

The problem with the proposal is in the implementation, specifically, how it will be financed. The proposal effectively subsidises the companies that have profited from the energy crisis, while we foot the bill. Worse still it incentivises costly fossil fuel production over renewable energy, which  is cheaper, climate friendly, and can be bought on-line quickly. 

Our energy pricing, controlled by Ofgem is where the shortcomings begin; in the wholesale market generators sell energy to suppliers who, in turn sell it to households and businesses. The wholesale price is determined by market forces, but the retail price is subject to a cap set by Ofgem. 

This ‘cap’ was the reason that a number of energy suppliers failed, as it prevented them from passing on the rising cost of wholesale energy to retail customers. Truss’s proposal means that whenever wholesale prices exceed the retail cap, the government will compensate suppliers for the difference.  

In effect the government will guarantee the income of the energy suppliers. The question to ask, is do the companies that dominate the sector need this support, and do they deserve it? 

The suppliers have been making obscene profits, and the amount of tax they pay is minimal compared to the dividends they pay to shareholders, many of which are foreign governments. Offering a no strings attached guarantee, such as a dividend ban, or a  further windfall tax is undeserved and unjustifiable. 

In addition, Truss’s  tax policies can be viewed as regressive meaning that the majority of us will end up bearing the cost. 

Looking forward her proposal don’t take into account the geo-political pressures that have created this energy emergency. Russia is using energy as a weapon of mass destruction.  Putins’ response to our new policy was to state that, in extremis, Russia will export nothing, no gas, no oil, no food to Europe.  
 

‘Russia is using energy as a weapon of mass destruction’

 
Our new energy policy cannot be seen as long-term as it is not financially sustainable.  Our national debt is the lowest in the G7 bar Germany, which allows us the luxury of being able to borrow, the dollar, yen and the euro are the world’s reserve currencies and Canada runs a balance of payments surplus. In contrast, we are isolated, outside any of the major trade blocs, with a weak economy and a chronic balance of payments deficit. Selling £100bn of extra public debt a year simply to protect living standards could further weaken sterling leading to rising interest rates. 

Had the energy subsidy been funded by a further windfall tax it would have been more sustainable.  

Also, the policy is backward looking. Rather than using the emergency to replace expensive fossils fuels, we are doubling-up, lifting the fracking ban and ramping up offshore production in the North Sea. There is no sense or logic to this, other than it is necessary to appease the loony right whose support will be needed if the proposal is to be approved. 

We aren’t dealing with the crisis we are kicking the can down the road; renewables are now 9x cheaper than gas, the focus should be on increasing our wind and solar capacity.  
 

‘We aren’t dealing with the crisis we are kicking the can down the road’

 
There is a plan for renewables which is based around private generators being subsidised by being  offered lower energy prices today in exchange for more stable revenue streams in the future. The problem is that this is voluntary and, likely, slow to take effect, and is thought to have only a modest impact on energy bills. 

This is only tinkering around the edges, for renewables to have a meaningful impact the big public energy suppliers need to be involved. 

As is always the case with recent Tory governments ideology comes before innovation. They fundamentally believe in markets, meaning that they prefer throwing money at a broken private system, instead of what they perceive to be socialism, I.E., a public energy company. 

Then, of course, there is the looming menace of Brexit. 

Pre-Brexit we were linked via undersea interconnectors to Irish, Dutch, French and Belgian grids, and to a special deal, with Norway. The price was set in the single market and electricity flowed freely as capacity ebbed and flowed between the networks. 

Post-Brexit we are part of bureaucratic, expensive auction system, raising the price of electricity and exposing us to supply pressure. In addition, the US energy secretary, Jennifer Granholm, has required all US refineries exporting petrol, diesel and distillates to build up their reserves rather than exporting, further constricting supply. 

Looking beyond simple politics, I see no reason why, under Charles III, the monarch will not flourish. By comparison the Tory’s feel like dinosaurs appealing to fewer and fewer voters as they become isolated in their own little world. We need a monarchy now more than ever. 

I can’t finish without one final tribute to the Queen; I thought long and hard and then realised that a bear, specifically Paddington, had already said it for me: ‘Thank you, Ma’am. For everything.’
 

‘When tears are in your eyes

I will dry them all

I’m on your side

Oh when times get rough’

 

1. 1 – A quarter of our national debt is represented by Gilts indexed to the level of inflation 

 
Philip has never claimed to be a royalist, but his tribute to Her Majesty reflects his acknowledgement of a job well done; a bringer of hope and stability, and a person that genuinely cared about everybody, and not just the privileged few.

The tributes and fond recollections recounted across the media in the past week speak of a warm and generous person with a twinkle in her eye and a keen sense of humour.

After Charles III’s irascible display after an ink well spoiled his day may have caused the 27m people that have watched the clip on Twitter to wonder what life will be like for servants in the new royal household; Camilla’s rolled eyes suggest she has seen it all before, and staff at Clarence House won’t have to put up with his irritability any longer – they are on notice of redundancy.

Fair play to Gerald Ratner @geraldratner who tweeted ‘I think it was me who sold Charles that pen’.

Elsewhere, as inflation eases back on the strength or marginally lower petrol prices, Matalan Maggie has written a massive IOU on behalf of future generations to subsidise the price of energy whereas polls show overwhelming public support for a windfall tax on energy companies’ obscene profits.

With those that pull her strings and wooden larynx doubting the need for ‘green crap’, the environment could be just one battleground as the Tory ‘grandees’ live out their alternative lives and average Joe contemplates a potentially catestrophically gloomy winter ahead.

So what was Philip thinking?:

The other story is the fastest U-turn in history, as, in the space of a few weeks, we have gone from no bungs and handouts to the biggest in history.

It looks optically great until you realise that the culprits, the energy providers, aren’t paying we are. It’s just ‘buy now, pay later’.

In all respects its short-term, we need Ukraine settled as we cannot fund this long-term, it’s just kicking the can down the road. The loony right continues to dominate, in return for their support of more deep-sea mining and fracking, instead of the cheaper, quicker, green crap.

I believe Truss will fail because although the symptoms of high inflation are akin to the 1970s, the underlying issues are different. This is the last leg of the L-shaped recovery post-2008.

Thatcher basically used free-markets and small government to dump dying industries causing economic and social devastation to areas in the Midlands and North. That’s gone and done, there is nothing left. If Truss wants growth she has to spend, have a more interactive government, and reflate the economy.

There will inevitably be a collision between workers and the government. The monarch is perhaps more necessary that it has been for years, it might just be the glue that keeps everything together.

Lyrically, we start with the Smiths wonderful ‘There is a Light That Never Goes out’, a fitting tribute to a monarch that will be fondly remembered. To finish we have Simon & Garfunkel’s ‘Bridge Over Troubled Waters’, because that is just what Charles III will have to be. Enjoy!

 
@coldwarsteve
 

 
Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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