Where finance and media intersect with reality


ALTIF transcripts: What to do about the energy crisis?


What to do about the energy crisis

Prices are high; supply is insecure; basically it’s a nightmare. But which levers do you pull to make things better, and which do you leave well alone? We talk to former Number 10 adviser and consultant Josh Buckland about how to fix the UK’s energy woes.

Presented by Jonathan Ford and Neil Collins.

With Josh Buckland.

Produced and edited by Nick Hilton for Podot.

Sponsored by Briefcase.News

Neil Collins, Josh Buckland, Jonathan Ford

Jonathan Ford 00:06 Hello and welcome to a long time in finance with Jonathan Ford and Neil Collins, in partnership with briefcase.news, the service that brings intelligent curation and analysis to your media monitoring.

So Britain faces its biggest energy crisis since the 1970s. The prices of petrol and electricity have rocketed and show no sign of dropping. Gas and electricity bills are up more than 50%. It’s well worth remembering that it’s summer. And what happens when, as it will, winter comes around again.

Beyond that, there’s the bigger question of how to make our energy
system more resilient while ensuring it remains affordable. The war in Ukraine has reminded us all that we can’t afford to rely on some suppliers, such as Russia, for hydrocarbons.

What’s clear is that the UK faces some pretty difficult choices, so we thought we’d get an expert along to discuss them. Now, Josh Buckland calls himself a recovering civil servant. He was energy advisor to two business secretaries, Greg Clark and Andrea Leadsom, as well as an advisor in Number 10 Downing Street, both to David Cameron and Theresa May, and he’s now a partner at Flint Global, a business consultancy. Josh, welcome.

Josh Buckland 01:20 Lovely to be talking to you today.

Jonathan Ford 01:21 Well, look, it’s great to have you. There are clearly two issues here; the sort of short term, which is helping people through the worst of what’s going on at the moment. And the longer term, which is plotting a new course to ensure energy markets are a bit more stable than they have been. Do you think the government’s got a handle on either of them?

Josh Buckland 01:39 I’d say probably in short, not quite, and in truth, prices are going to go up further; we’re expecting a further increase in the price cap in October, it could go up – the Bank of England said it could go up by as much as 40%. That could leave a considerable number of households in serious financial distress. There’s already (inaudible) out there showing that a third of households could fall into fuel stress this year, the problem is pretty existential. It’s pretty unarguable to think the government doesn’t have to go further. There’s clearly still limits on what it can do, and maybe we can come to that, but it’s obvious that on the affordability side, there’s more to be done.

And on the more immediate kind of security side, it’s obviously committed to ending all imports from Russia – there’s been an immediate kind of focus on unlocking greater levels of gas supply from the Middle East and elsewhere. But the evidence in terms of the value that they managed to exert, and the new and additional resources they’ve got, is relatively limited. So both from an affordability and a security perspective, there’s risks coming into next winter.

On the longer term, I think it’s safe to say things are only just getting started. There’s been lots of political bluster, I’m sure we’ll come to this, on the new targets that government has committed to, but saying one thing, and delivering, is completely a different factor. Clearly, there’s more
investment that’s required to calm markets. But ultimately, the fundamental challenge around making the energy system more resilient and driving more homegrown energy is really only at the beginning, and the government’s got a pretty tough hill to climb if it’s going to actually manage to do that by the mid-2030s. And also, it’s starting to bump up into more fundamental questions. If you do want to run an electricity system at a kind of 95%, renewables low carbon system, you’ve got a real challenge to think about how that system operates, and how you keep affordability down over the long term. So I’d say probably on both the immediate and the long term, yes, they made a start, but there’s a shedload more to do.

Jonathan Ford 03:29 Can I just ask one question about the security issue, the short-term security issue? Obviously, Britain isn’t a big buyer of oil and gas from Russia itself. But the concern must be that in the general scramble of everyone trying to find new sources of supply, we’ll just find the costs are going to go up – or is there a fundamental risk that we’ll just not have enough?

Josh Buckland 03:49 I’d say that kind of security of supply is not just a binary, ‘do you have enough?’, it’s also can you pay to get it. And ultimately, if there is a rush, especially on the gas side, in the run-up to next winter, the UK faces a pretty tough situation. On the fundamentals, the UK is pretty well connected; we’ve got good import capacity, (better than a lot of areas of Europe, actually) we’ve got domestic oil and gas reserves, and also clearly we’ve got the opportunity to strengthen relationships with other areas of the world, especially given the energy market is expanding. But we also face specific risks. You’ve got a UK energy system, which is predominantly gas on the heating side, and clearly that represents a particular risk, whereas some areas of Europe have a much lower gas demand on the heating side, which is a particular problem in the winter period. So on the fundamentals, the UK shouldn’t have a security situation. But clearly, if prices continue to rise, and there is a continual geopolitical tension, it could become that the price that we’re having to pay become so detrimental, that difficult decisions have to be made. And clearly, you would assume those would impact potentially business before consumers but I don’t think it’s easy to rule anything out at this stage, given the kind of madness we’ve seen over the course of the last couple of months.

Neil Collins 04:54 How much do you think that the elasticity of demand will kick in here, because the price has risen so dramatically, you would have thought this must have an impact, both on domestic demand and on business demand (it’s already having an impact there). How inelastic is the demand for gas in the UK?

Josh Buckland 05:14 So I think you’re already starting to see it, as you say, on the business side, we’ve seen it in areas of Europe, particularly in Germany, where there’s been some industrial turn-down. Businesses themselves in the UK are already having to make difficult decisions as well, especially where prices are spikier. The challenge on the household side is that there is relatively inelasticity. On the electricity side, broadly, people don’t change their electricity use, and there’s limited impact and the ability to be able to do so. The risk on the gas side is that yes, it potentially is more elastic, but that’s driven largely by people not turning their heating on enough. And that’s where you then end up in a difficult situation with considerable levels of fuel poverty. And that obviously has knock-on consequences for the NHS, and ultimately, for people’s health and well-being. So I think the challenge on the domestic side is that yes, clearly there is a bit more elasticity on gas heating. But the impacts and the implications of that both economically and socially for the government are so severe that they’ll have to act ahead of the winter.

Neil Collins 06:08 So if you were an advisor to the government, what would your recommendation be?

Josh Buckland 06:14 So I think it’s easy to see the kind of problem as existential. But in truth, this is a pretty exceptional circumstance, prices have risen by a factor of 300-400-500%. And you would assume at some
stage, they’ll come back down. But clearly, prices are gonna stay high for a period of time. So at some stage, governments are going to have to think about other options. The most obvious is: make homes more efficient. Ultimately, if we use less, there is the opportunity to lower bills. So, some sort of programme with a considerable investment around energy efficiency could be one option, potentially. Then again, the challenge there is how much can be done before the winter.

Jonathan Ford 06:47 That seems to me always, I mean, we’ve had numerous energy efficiency schemes over the years. They’ve had very low take-up. There’s always a problem that actually, you’ve got 28
million households in the country, and the idea of insulating them all by Christmas, is totally implausible. So it’s hard to see that chipping in very much, whatever it can do over the longer term. I personally think there are still quite big hurdles in the way of getting people on lower incomes to actually contemplate, you know, the disruption and cost of these sort of
big exercises.

Neil Collins 07:21 I’d go further, I’d say it’s pie in the sky, I don’t think there’s any possibility of mass insulation of existing homes, because it’s disruptive and expensive. And paying the gas bill is next month’s problem. And it’s certainly an order of magnitude less than having your cavity wall insulation, or your double glazing, all of which are major capital investments for most people. I just think it’s a dream, really.

Josh Buckland 07:50 No, and I would agree on the timing issue, I think ultimately it won’t help us this winter. On the affordability side more generally, the energy efficiency, there are some low-hanging fruit; there’s kind of millions of homes that have had loft insulation, government can effectively pay for the whole of that rather than necessarily put the onus on households. The challenge, as you’ve rightly said, is when you get into more invasive measures, and back to Jonathan’s point, that’s really only a
medium to long-term solution, because ultimately, the timing that would take, especially given the different makeup of homes in the UK, will have very little impact in the near term. So really, government’s got a difficult challenge on cost – and that’s not something it’s going to be able to get out, sort of, through energy efficiency this winter.

Jonathan Ford 08:26  Do you think we’ll need to have some measure of compulsion to get these measures through, ie people be told; you can’t sell your house, or not just the sort of carrots which we’ve dangled, but some stick will have to be administered?

Josh Buckland 08:42 Definitely not desirable, but to some extent, maybe required over time. I think there is already an element of compulsion. So if you’re a landlord, and you want to lease a home, you’ve already now got to get it to a minimum level of energy efficiency. That is, by proxy, some level of compulsion. What it is not, though, is a requirement, and obviously, a ban from selling a home. What you’re more likely to do, like you said elsewhere, is some sort of economic marker; you need to make this a rational economic choice. So you could have a tax incentive linked to say stamp duty, that gives you a discount in the event that you decide to make your home more energy-efficient.

You can look at tax leaders potentially as a route to doing that. I personally, politically, don’t think it’s credible, that we will ever be in a position where we will ban people from selling a home or alternatively, we’ll get into a position where we will force people to rip out their current heating system. I don’t think that’s politically credible, and I think ultimately that will undermine the green cause. What we’ve got to do is try and create an economic incentive over time, which becomes a rational economic choice. And that is a 15 to 20-year game. It’s not something you can do in the next three to five years to bail yourself out of the current Russia-Ukraine situation.

Neil Collins 09:43 Do you really think that the proposals to ban the sale of gas boilers and force people to have hydrogen or heat pumps is really credible, or it’s just a piece of political posturing, which will be
somebody else’s problem after the current administration’s gone?

Josh Buckland 10:03 I don’t think ultimately a decision to ban makes sense if you don’t have the alternative at a reasonable and justifiable cost. So yes, you could set a long-term marker, and the government’s already done this, it’s set out an ambition. But ultimately, what matters now is what they do over the next 5 to 10 years, to drive down the cost of those technologies. So investment in technology, investment in the supply chain, trying to bring down through additional support, exactly what’s happened on electric vehicles, the model where you try and drive down costs, that’s got to be the priority.

Jonathan Ford 10:29 So we’ve talked a bit about the consumer side, and what can be done in the short term. Why don’t we move on to the longer term question about how are we going to get all these secure energy supplies that the government is now saying that we need? Well,
you’ve always got views on this Neil.

Neil Collins 10:45 I would say, I will say, get fracking baby, and exploit the North Sea. I mean, it just seems screamingly obvious to do. But then I don’t believe in net-zero. I think if it ever comes, it’ll be a long way away, because the primary energy source for the world for the next couple of decades, at the very least, will be hydrocarbons, one way or another. And there’s no point pretending something else. You mentioned electric cars. That works fine, provided you keep pumping subsidies in them, and tax petrol and diesel to blazes. It’s extraordinary how electric cars don’t cause congestion. It’s really remarkable, in London, I think that’s one of the great, great phenomena of our time. But I think…

Jonathan Ford 11:36 Getting this off your chest now, yeah?

Neil Collins 11:37 I got plenty more, plenty more on my chest to get off. But the serious point is this idea of carbon neutrality within my lifetime (I’m quite old), but it’s just a fantasy. It’s just you know, the government sets these targets, as I say, knowing full well, that it won’t be in power at the time when they’ve got to be met. They can set them all they like. But the reality is that they’re never going to meet them.

Jonathan Ford 12:09 Neil’s point is, I think, I’m going to paraphrase here; that basically, forget about windfall taxes and all that nonsense. The only way we can produce energy in large volume at lower cost is to increase the supply of oil and gas. We should be focusing on that. And we should worry about renewable energy, nuclear and all this other stuff another day. That’s obviously not been the government’s position. They’ve said, let’s crack on, and actually this is presumably in their view, the cheaper way of getting secure supplies in future – is to do much more renewable energy, and more nuclear. Where do you stand on all this?

Josh Buckland 12:45 You’ll find they actually aren’t doing the former, government’s new energy strategy basically sets out yes, a lot of ambition on the renewable and nuclear side, but essentially a free reign when it comes to oil and gas. It’s very clear that oil and gas is going to continue to play a role out to 2050 and probably beyond, just in a different sort of format. And even all of the kind of climate projections show that the UK will likely be using it to considerable portion, and especially gas, and less to a lesser extent oil, right the way through to 2050. So what the government has said is, look, the right response to the current crisis is to try and get that from a more secure destination. So expand out the North Sea, potentially do kind of strategic deals with the Gulf, and potentially the US, we’re already getting a lot of energy from there. And even look, again, at the fracking question; there is definitely a renewed vigour about a balanced energy mix, acknowledging the fact that you can’t simply decarbonize overnight, and a lot of our energy supply is going to rely to an extent on hydrocarbons for a considerable period of time. Whether it can deliver that I think we can all debate based on history, whether that’s credible, but I don’t think… it’s far too far away from what you’ve actually described?

Neil Collins 13:49 Well, I don’t think there’s any argument about it, if you base it on history, there’s no way they can possibly do it. And I looked at the energy white paper, and it’s just… it’s full of hope and promise, but no idea of how to get there. I’d just like to know your views on fracking, not on whether or not it’s a good idea, but I think that my view is that at the very least, we should find out whether there really is an exploitable reserve there, rather than just pretending that it’s either going to save us or is going to destroy us.

Josh Buckland 14:27 Fracking absolutely makes sense – if you’re needing gas especially, and you are looking to secure it from (inaudible) look at the fracking revolution in the US. It’s made them essentially energy independent, it’s lowered the price of gas, especially in the US, but it’s also now adding value elsewhere. There’s absolutely no reason, if you’re doing, especially offshore oil and gas, that fracking is – and all the science actually does tell you, that it’s not necessarily unsafe, there’s a question around seismicity. So therefore, the question was geography and the question is whether the UK should do fracking, and I spent many years in government especially under the Cameron government trying to accelerate and develop the UK’s shale reserves. The challenge is, firstly, it’s a question of population density; the UK does not have the same level of kind of space and available acreage and the same land rights as the US – that’s given them a huge advantage. They’ve got a million I think active fracking wells at the moment, it’s hard to see how you replicate that in the UK – and that’s the only way where you make a kind of serious dent in UK, if not kind of European supply. But as you say, as prices go up, and there is changes underlying within the kind of energy system, it’s always worth looking at other options again.

Neil Collins 15:29 Again, we haven’t actually found out whether it’s worth exploiting, people have views but until more wells are drilled, we just don’t know. And I think that the least we should do is drill the wells and see. And perhaps one might be a bit more imaginative about how you cope with the local communities by perhaps giving them a discount or some special offer to offset their concerns, which might concentrate their minds a bit, assuming that it is exploitable, which we don’t know.

Jonathan Ford 16:03 Let’s talk about nuclear.

Neil Collins 16:06 Oh all right, you better give us a couple of sentences on nuclear.

Jonathan Ford 16:11 No, hang on, not having your mealy-mouthed questions! I suppose I’ve been a little bit alarmed by the kind of chopping and changing that has gone on in terms of jumping from one technology to another. Do you think we have to make a hard choice if we’re going to do this and really commit to build a large fleet of the same type, rather than what we’re doing at the moment, which is saying, well, we’ll have one from EDF here, we might have one from Westinghouse in Anglesey, and we’ll have a few Rolls Royce SMRs dotted around. Are we in danger of just ending up with a kind of rather half-baked strategy where we build a lot of stuff, but we do it rather expensively?

Josh Buckland 16:54 I’ll give them that I think we’re at risk where you kind of… you talk about building a lot of stuff but you never actually build it, I think that’s the greatest risk. The challenge with the nuclear saga, and I think Dieter Helm has said this and I agree with him completely; if you’re going to do nuclear, you either need to do it or not do it at all. That is the dynamic you’ve got to be into.

The nuclear power stations cost 20 to 25 billion pounds each on kind of current numbers, maybe less if costs come down. You’ve got to be serious about building a fleet. There is a question in my mind as to, if you are serious about it, what is the role of the state in actually developing and building these projects. We’ve now got the new Great British Nuclear that’s been coined, that’s the first start of that journey, if you take my view, I think at some stage, we’ll have to get to a very difficult position as to whether the UK is willing to really stand behind these projects and accelerate them.

Jonathan Ford 17:39 I mean, I share your view, I think if you aren’t going to do this, you need to do it at the lowest economic cost. And although there are problems with state owned enterprises, the state doesn’t need to own the nuclear power station forever. But it probably needs to be involved in the construction of it as effectively the owner.

Josh Buckland 17:59 That is definitely my view, I think there’s no getting around the fact that the private sector will struggle to take nuclear construction risk at the scale that is required. And therefore looking at
some sort of divergent model potentially, the option to then, as you say, sell when you get into operation, is an opportunity. The other thing is to look at other technologies – so look at potentially small technologies, or whether they can potentially change the dynamic.

The challenge with those is they’re obviously kind of newer to the party, and therefore to that extent high risk and you still have that nuclear element. That doesn’t necessarily mean that you can resolve the challenges around the financing side. But ultimately, you’re gonna have to bite the bullet at some stage and get the state more involved in the construction side.

Jonathan Ford 18:34 Well you anticipated one question I have, which is if you don’t have nuclear, where do you go in terms of dealing with the intermittency risk of lots and lots and lots of renewable energy?

Neil Collins 18:45 Oil and gas is where you go.

Jonathan Ford 18:47 that’s where he goes.

Neil Collins 18:51 Well, of course, right? There is no alternative. Nuclear might be fine one day, but the history of British nuclear development is, frankly, embarrassing. And the market didn’t even want it when the stations were built, let alone the construction risk. There may be a change over time, but I very much doubt it. It would be extremely expensive.

Jonathan Ford 19:16 Well they did buy it. They bought British energy didn’t they?

Neil Collins 19:18 They did. Yes. But I mean, didn’t last did it?

Jonathan Ford 19:20 You know, because the rules were changed.

Neil Collins 19:21 Well, that’s what governments do. They change the rules. Devil take the hindmost. The idea that the private sector can come dancing in and say, oh, yeah, well, we think nuclear is marvellous, is just another government fantasy. It just won’t ever take place.

Josh Buckland 19:39 Yeah, I wouldn’t disagree at all. Just back to the question on kind of, what if you don’t get nuclear therefore, what do you get? You do get more oil and gas, but the question for government is whether it can reduce the carbon intensity of that through carbon capture and storage. Because that’s the alternate option for baseload, and for the kind of flexibility you need. Do you have a big programme of gas with carbon capture stuck on the top of it, do you have a big programme of hydrogen power stations kind of offshore wind producing green hydrogen
pumping into power stations? That’s the alternative. They may even be in addition, you may need both. But that is obviously very unproven and ultimately, potentially quite high cost.

Jonathan Ford 20:15 From where you sit; how optimistic are you about technologies like CCS.

Neil Collins 20:17 Sorry, CGS?

Jonathan Ford 20:18 Carbon capture and storage where you basically squeeze the carbon out of an emission….

Neil Collins 20:24 People know what it is, they just dont know the initials, that’s all.

Josh Buckland 20:28 Danger of abbreviations in the energy world! The technology itself is not that complicated. The challenge is how you make it knit together. So you’ve got to have a power station, you’ve got to have the carbon capture on the top of it, you’ve got to have the pipes to take it out, you’ve got to have the stalls in probably in the North Sea on the UK perspective, as well as the other side. That is a complicated network, the one thing governments are not good at doing is developing complicated networks that have shared risk and therefore quite complicated financing arrangements. So yes, CCS can absolutely work. The question in my mind is, can the networks that are required to store kind of millions of tonnes of co2 under the sea work collectively? And also what is the cost base for that? Because ultimately, it’s clearly going to be expensive initially compared to the alternative, and can there be enough political will to continue to develop a programme that’s required? Those are the kind of things in my mind that still needs to be resolved.

Neil Collins 21:20 Is there a commercially viable plant anywhere in the world that’s doing this?

Josh Buckland 21:25 Not without support? No, not at this stage.

Neil Collins 21:28 That’s why I mean, commercially viable? That sounds like the answer is no.

Jonathan Ford 21:32 Can I ask? So the way that the government has pursued a lot of this strategy towards decarbonizing the economy has been through a system of incentives, which have obviously encouraged quite a lot of activity, people have built a lot of solar farms, a lot of wind farms around the country. But there is a question about whether you actually really do need to, given the level of sort of state and consumer support that goes in, and also the complexity of getting to the more difficult late stages of this, whether you need to have something akin to the old CEGB or a strategic kind of controller to basically decide how to do this. Do you think that’s likely that we’re moving towards that sort of world where you actually will see it, the government essentially taking much more strategic control over what is being done rather than simply offering an incentive here and incentive there? What do you think?

Josh Buckland 22:26 My civil service colleagues (inaudible) may not thank me for this, but I’ve said recently, I think the CGB is coming back, you’ve got it, and you may have missed it. It’s kind of in wonk world at the moment, but there is the creation of the future system operator happening at the moment, a quasi-kind of government body, which will be publicly owned, that sits in the middle of the energy system and starts to create both markets and strategic plans, both around networks as well as potentially generation spatially as well as potentially elsewhere. So that potentially is your cloak and dagger for the creation of the new CGB. Yes, it doesn’t yet have the kind of equivalent power or the equivalent kind of force, you may never want to get there, but I think there is an acknowledgement that if you’re going to build mass offshore wind networks, huge nuclear power stations, very significant CCS networks, you need more strategic control and planning, we may go back to a world which is more centrally planned, and therefore more forced.

Neil Collins 23:21 When I hear the word central planning I reach for my revolver.

Jonathan Ford 23:25 Gosplan.

Neil Collins 23:26 Yeah. My final question is, Josh, do you believe in the old commodity adage that today’s shortage is tomorrow’s glut?

Josh Buckland 23:37 I think in truth, there is clearly going to be a bucket load of investment. To be honest, over the last couple of years on the oil and gas side especially, there has been obviously a kind of an element of restriction on investment that is now going to change. You’re seeing companies across especially Europe thinking about major LNG terminal investment, potentially big finds in new areas. There is definitely going to be a drive through to new investment which at some stage may create a bit of a glut.

The one caveat to that though, I would say, is that there are
structural reasons to think demand especially for gas is higher. China is demanding more gas, Asia are demanding more gas, can the world keep pace with that uptick in demand? Potentially not, in the event that there isn’t this pace of investment that’s required. So yes, the old adage I believe in, but there are structural reasons to think not. Again, though, clearly, we might be heading into a major economic meltdown. So if that happens, you may find that suddenly, the world is awash with oil and gas again, and prices collapse.

Jonathan Ford 24:30 On that cheery note.

Neil Collins 24:38 That was a long time in finance with Jonathan Ford and Neil Collins, editing and production by Nick Hilton, and our sponsorship partner is briefcase.news. Join us again next week.

The Daily Blind Spot newsletter

Latest posts

If viewing on a mobile simply tap the QR code

One Response

  1. Fantastic discussion and very interesting, but as ever a very important point is often missed.

    So we can move human beings around like ignots of steel and there’s always somebody in the private sector with their cheque book open ready to hire them? The human factor and how you treat other human beings during a very large transition like this. Should actually be on top of the priority list.

    The real cost wether it is a high cost of low cost is measured by how many skills and real resources you have. When you try and move them where you want them to be. How do you do it.

    When Thatcher moved human beings from the mines and shipyards into services and high end manufacturing what mistakes were made and how do you learn from them. What can the trident debates add to the mix. So that human beings are top of the list when it comes down to priorities.

    A transition job ( job guarentee) has to be put in place at a living wage. That gives human beings time to adjust to the new reality. To learn new skills and up skill in order to transition between different sectors in the economy. Rather than being left to rot in the areas of the country that are hit hardest when a transition like this takes place. Do what Thatcher didn’t do.

    Between 1935 and 1943, the WPA literally built the infrastructure of modern America, including 572,000 miles of rural roads, 67,000 miles of urban streets, 122,000 bridges, 1,000 tunnels, 1,050 fifty airfields, and 4,000 airport buildings. It also constructed 500 water treatment plants, 1,800 pumping stations, 19,700 miles of water mains, 1,500 sewage treatment plants, 24,000 miles of sewers and storm drains, 36,900 schools, 2,552 hospitals, 2,700 firehouses, and nearly 20,000 county, state, and local government buildings with unskilled workers. The unskilled workers built modern day America.

    They transitioned to private sector jobs and some set up their own companies and became entrepreneurs. Learning new skills on the job. Or have them sitting at home doing nothing.

    With trident or war the question ” how are you going to pay for it” never pops up.

    What is so revealing about debates over military spending. When the chips are down the numbers become irrelevant. Not one government minister anywhere has ever said that they can’t bomb Baghdad, Bazra or the Balkans because they don’t have the budget.

    Of course that is because the numbers are indeed largely irrelevant for all government spending. In fact the numbers have become a mechanism in debates to avoid talking about the substance of government intervention in the economy — what the government proposes to use real resources for, where it is going to get those real resources from, and what the alternative uses are for those real resources.

    Trident costs what it costs to produce. Whatever is required to get the job done will be procured and placed at the disposal of the project. The cost, as with any government intervention, has nothing to do with money. If it is available for sale in the government’s denomination, then the government can always purchase it — whether that is missile systems or social housing. And, if it wants to, it can set the price in its own currency — simply by banning or restricting alternative uses of those resources until it gets what it needs. You see this all the time when a country is at war.

    The cost is, in fact, the people and resources required to create and build the submarines, crew the submarines and the ancillary services and suppliers that feed into the process. The unions representing these workers asked what else these people would be doing instead if Trident was not renewed, and there were very few answers to be had on that point in the debate. MPs opposed to Trident failed to make any reasonable case for alternative used of these skills and real resources.

    Most MPs opposing the motion talked in terms of money, about how the money could be spent on the NHS, social care, or housing. But again the use of figures masked the actual problem. The ship builders on the Clyde, or in Barrow don’t get up in the morning and think “today I’ll be a doctor”. The Navy staff don’t decide that they will build houses on a Thursday instead of piloting boats. It’s a ridiculous notion, and one that is rightly dismissed by the unions as hand-waving.

    But it shows how ill-informed our representatives are about the way government spending works. They implicitly rely upon the magic of free markets to provide ship builders, navy crew and parts manufacturers with alternative orders and engagements. The free market assumes that people are mutable between professions at the snap of a finger. When government lays people off, there is never a list of private sector employers sat there with cheque books at the ready. Even outsourcing’s open secret is that it is really a way for government to fire people without getting their hands dirty.

    Government never seems to realise that the only way it can fire people is if they are hired and retained by the private sector. If that doesn’t happen then government just goes from paying people to do something, to paying people to do nothing. Hardly a sensible approach and what a transition job program would fix in a heart beat.

    It is time to break down the frame of numbers. It is time to refuse to speak in terms of numbers, and start talking only in terms of people and real resources required to get things done. That way we can avoid the nonsense of pretending submarine crew can become surgeons overnight. We can address the actual shortage of skilled staff without believing they will magically pop into being just because we’ve taxed some rich people.We can debate the actual use of the nation’s resources and ask if what people are currently doing is actually the best thing they could be doing. To use the skills of the people or, where it is going to get those skills from, and what the alternative uses are for those skills.

    Or we get Thatcher part 2 and not learned from our previous mistakes.

    Resources Are People Too


    The Supply Process:


Leave a Reply

Your email address will not be published. Required fields are marked *