Is Ed Davey’s energy bill really turning Blue, Green?

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Open letter to Ed Davey on Draft Energy Bill

Open letter from SGR to Ed Davey, Secretary of State for Energy and Climate Change, on the Draft Energy Bill and wider UK energy policy. The letter makes four main criticisms: insufficient curbs on greenhouse gas emissions of fossil fuel plants; favouritism towards the nuclear industry; inadequate support for the renewable energy industry; and failure to prioritise energy conservation.

First posted on 19 July 2012

Rt. Hon. Edward Davey, Secretary of State
Department for Energy and Climate Change
London

Dear Sir

Open letter on Draft Energy Bill and wider energy policy

We write on behalf of Scientists for Global Responsibility (SGR), a UK organisation with 1000 members drawn from across the science, design and technology professions, and with a concern for peace, social justice and environmental sustainability.

We wish to add our voice to the widespread criticism of the Draft Energy Bill, published in May, and also highlight our broader concerns about current UK energy policy. In summary, our concerns are the following.

• Insufficient curbs on greenhouse gas emissions of fossil fuel plants. We note with considerable disappointment that the Bill has set an Emissions Performance Standard for new electricity generating plant at the unambitious level of 450 g/kWh, and that such power stations would be subject to the level until 2045 (Section 36). We are also very concerned by loose wording regarding exemptions for projects intending to use Carbon Capture and Storage technology (Section 37), which we firmly believe could be used to side-step restrictions for new unabated coal-fired plant. Both these factors are highly likely to undermine attempts to meet carbon reduction targets under the Climate Change Act. As the Committee on Climate Change (CCC) has recently noted,1 such shortcomings could be remedied by including an explicit target for a reduction in carbon intensity in the electricity sector – of no more than 50 g/kWh by 2030. We strongly urge you to insert such a target in the Bill.

• Favouritism towards the nuclear industry. The system of proposed incentives for building new low carbon plant is, in our view, strongly geared towards supporting new nuclear power over renewable energy technologies, and creating ways to side-step the commitment not to subsidise nuclear power. We have numerous concerns about nuclear power, but perhaps the most pertinent to the current situation is the poor progress being made with current new nuclear plant construction in Western countries – specifically, Olkiluoto in Finland and Flamanville in France (both many years behind schedule and massively over-budget) – coupled with spiralling estimates of build costs, more generally.2 Government cost estimates – and indeed those quoted by the CCC – do not seem to reflect such real world experience and we strongly urge the government to reconsider such support mechanisms. The key problem in our view is the current proposal for Feed-in Tariff with Contracts for Difference (FiT-CfDs). While a strong case may be made for support mechanisms for new technologies as they move towards commercialisation, to use such a mechanism for established technologies such as nuclear power seems deeply illogical – as well as being a clear breach of the coalition government’s commitment not to subsidise nuclear power. And for these mechanisms to lock the consumer into supporting such technologies for as much as 25 years (compared with only 15 years for renewable energy projects) is high risk. Coupled with numerous other measures which benefit only the nuclear industry – not least favourable insurance conditions and fixed unit pricing for radioactive waste disposal – this mechanism as currently planned has, in our view, little to justify it. We therefore call on the government to exclude nuclear power from the FiT-CfD system.

 Inadequate support for the renewable energy industry. There is a distinct lack of ambition shown by the government for the expansion of renewable energy in the UK. We have an enormous indigenous resource base – especially wind and marine – and costs are falling rapidly – especially in technologies such as onshore wind and solar photovoltaics. Employment opportunities in these areas are large and growing. The government is aware of all of these factors and yet has responded recently with over-zealous and poorly organised cuts to solar energy tariffs and with such lukewarm support for wind power that Vestas has cancelled its plans for a wind turbine factory in Kent which would have employed nearly 2,000 people. In general, the control framework set up for DECC spending on renewables is too restrictive3 – especially when compared with the generosity shown to the nuclear industry. Given the transitional nature of the financial support needed as these technologies move towards a more competitive position – unlike that for nuclear power – we strongly urge the government to shift its position and provide significantly more financial support to key renewable energy industries.

• Failure to prioritise energy conservation. We have been very disappointed by the government’s proposed Green Deal, which in our view is also unambitious. While improvements have been made recently, it still seems very unlikely to exploit the enormous potential for reducing domestic energy demand in the UK. Indeed, compared with existing energy efficiency schemes, analysis suggests that it will be markedly less effective.4 Two key flaws in our view are a low level for the ECO subsidies, and a lack of timeliness in issuing documentation to allow the businesses expected to deliver the scheme to forward plan. However, we believe that the problems with policy on energy conservation run much deeper. Here we wish to endorse the call from a recent WWF-co-ordinated study5 that argued that energy conservation be put at the heart of UK energy policy, rather than added as an afterthought. Only a fundamental shift of this nature will, in our view, deliver the combined goals of providing energy security, reducing greenhouse gas emissions and tackling fuel poverty.

In summary, we do not understand the government’s position. The development of a low carbon economy offers the UK a real opportunity to create long term jobs through sustainable improvements of households and businesses across the UK. Government support and stronger regulation would drive a strong regeneration of the economy. In our view, there is a powerful argument to use what would amount to a small proportion of the sums for quantitative easing (which currently stand at £375bn) for direct support of a large-scale UK-wide insulation and business premises upgrade programme. Recent studies show that such a programme would pay for itself at commercial interest rates, provided funding of the order of £5-10bn can be secured for major city regions such as Leeds, and that this activity could be scaled up across the UK.6 We are aware that such proposals have been put directly to government by both CCC expert advisors in the economic sphere, and by other senior advisors to government, and we think that this is an opportunity that should be grasped for the benefit of the UK economy, our world standing as a climate change leader and would have support of the public.

Sincerely

Dr Stuart Parkinson, Executive Director
Dr Philip Webber, Chair

Cc:
Rt. Hon. Charles Hendry, Minister of State, Department for Energy and Climate Change
Rt. Hon. Gregory Barker, Minister of State, Department for Energy and Climate Change
References

1. CCC (2012). Meeting the Carbon Budgets: 2012 progress report to parliament. http://theccc.org.uk/reports/2012-progress-report
2. For example:
The Times (2012). May 7. http://www.thetimes.co.uk/tto/business/industries/utilities/article3406852.ece
Toke D (2012). May 5 (updated June 21). http://realfeed-intariffs.blogspot.co.uk/2012/05/edfs-nuclear-plans-are-more-expensive.html 
Toke D (2012). July 16. http://realfeed-intariffs.blogspot.co.uk/2012_07_01_archive.html
3. DECC (2012). Control Framework for DECC levy-funded spending. http://www.decc.gov.uk/assets/decc/11/funding-support/fuel-poverty/3290-control-fwork-decc-levyfunded-spending.pdf
4. For example:
Goodall C (2011). http://www.carboncommentary.com/2012/01/03/2230
5. WWF et al (2012). Securing the UK’s power supplies.http://www.wwf.org.uk/research_centre/research_centre_results.cfm?uNewsID=6074
6. Gouldson et al (2012). The Economics of Low Carbon Cities. University of Leeds.http://www.cccep.ac.uk/Events/Past/2012/April/EconomicsLowCarbonCities-mini-stern-review.pdf

About Scientists for Global Responsibility: 

Unlike the ‘technological optimists’ SGR recognises that science, design and technology are indeed part of the problem; but, unlike those who are indifferent or even hostile to science, SGR also recognises the enormous contributions that science, design and technology make to our civilisation and wellbeing. The new problems, as well as those that have always been with us, such as starvation, drought and illness, require a combination of new scientific, economic and political solutions.

If social justice, care for the other species of this planet, and a concern for future generations have their rightful place as fundamental values, then science, design and technology can be much more part of the solution than part of the problem. Here are just a few programmes that deserve much more science, design and technology funding …

  • the clean, sustainable production of energy, and its efficient use
  • the development and application of biological and medical knowledge to the benefit of all
  • the study of social and economic affairs with the aim of improving the lot of all
  • the development of clean, efficient transport systems, in a social setting which provides needed transport for all but inhibits unnecessary travel and freight-miles
  • the use of information technology to increase energy efficiency, reduce the need for transportation, eliminate unnecessary labour, and promote access for all to humanity’s pool of knowledge
  • the design and construction of energy efficient and zero energy building.

Will our Grandchildren be grateful to the Tory/LDs?

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Somebody Think of the Children

First posted on October 27, 2012 by 

‘I think we have a moral duty to the next generation, to our children and our grandchildren, to wipe the slate clean for them. We set out a plan, it lasts for about six or seven years, to wipe the slate clean. To rid people of that sort of dead weight of debt that has been built up over time… We owe it to the youngsters of today to lift that dead weight of debt off their shoulders.’

Nick Clegg, May 2012

Of all the justifications for austerity, the one which says we owe it to our grandchildren to deal with the debt is probably the most emotive. The national debt currently stands at £1 trillion and despite what Nick Clegg says (in the quote above he confuses the debt and the deficit), it’s set to rise year on year. Right wing commentators (such as Fraser Nelson) love to remind us this is £20,000 per person which will need to be paid off through higher taxation in the future. Now it’s true £1 trillion is certainly a lot of money, but is it true that our grandkids will suffer if we don’t deal with this now?

I would argue that the exact opposite is true. What we leave to our grandkids should be measured in real things. Will there be enough housing? Will our roads and railways be adequate? Are our schools good enough? Have we invested enough in the decarbonisation of our economy? In looking to cut now, I believe the Government are on the way to ensuring the answer to all these questions is no. That will be the real legacy we leave to our grandkids. By failing to invest for the future today we will bequeath a less prosperous economy, and a huge debt pile because at the moment austerity is failing to reduce the deficit.

But is this huge debt pile a problem? If it’s been built up investing for the future, it will be less of a problem than if it’s been built up by paying people not to work, but in both cases though, it’s a distributional issue rather than a funding issue. Every £ of government debt is an asset to someone else. The question is who holds these assets? If it is mainly those at the very top, that may be a bad thing. If it’s going mainly to support the retirement income of pensioners, maybe that’s not as bad. We could rectify this distributional issue through the tax system.

So who holds the national debt at the moment?

This data come from the Treasury and is up to date as of Sept 2012. You can see that following QE, the Bank of England now holds over a quarter of government debt. Any interest the government pays to the Bank of England must be returned to the Treasury as profit. So this portion of the debt is no burden on anyone. More QE is likely, so this proportion could rise.

About a quarter is held by the insurance sector. This includes pensions. Most pension funds hold government bonds as part of their porfolios as a way of generating low risk returns, and debt interest payments go towards pensioners income.

The other sector with large holdings of UK debt is the foreign sector. This includes foreign governments and corporations. Just over 30% of UK debt is owed to foreigners. A lot of people may be surprised it’s not higher and are worried about what might happen if foreigners stop buying our debt. The UK is seen as a safe haven at the moment due to the turmoil in the Eurozone, but if there did come a time when the rest of the world stopped buying our debt, this would not mean the government would cease to be able to fund its spending.

It’s possible to view government debt issuance not as a source of funding, but instead as a way of controlling interest rates. The government could actually turn that 25% of debt held by the Bank of England onto 100% and stop issuing debt externally altogether. Some Modern Monetary Theorists such as Bill Mitchell view government debt as “corporate welfare” and think the practice should be stopped altogether.

In summary then, it’s right to think about the longer term and worry about what life will be like for future generations, but in promoting austerity as a way of reducing the debt burden for our grandchildren, what we are actually doing is ensuring they will be less wealthy than if we invested now in infrastructure, education and decarbonisation. I don’t think they will thank us for that, so we need to invest for the future  now to ensure they will be better off than we are today. In Mr Clegg’s words, “we owe it to our youngsters”.

This isn’t Dickens, it’s Today: Winter’s Cold, Homeless and Hungry

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As we approach winter, the shops are hoping for a seasonal retail spree and begin the ultimate display of commercialization. Whether people are celebrating a religious festival or a more secular affair, or perhaps just a get-together with the family, some will look to the Christmas period with excited anticipation.

There will be others with a dread of the loneliness and others with fear of cold and hunger, not just being unable to afford the fripperies, those oh-so-unwanted wasteful things, often manufactured in their millions by workers who work for a pittance, while those hidden and tax-evading profiteers’ obscene piles of plenty grow and grow forever tall like skyscrapers high above the real world.

No, beyond all that, many look to Christmas without a sustaining meal, adequate heating or a decent home. Deprived of these by government cuts to welfare payments, by escalating prices by energy companies, wages frozen, jobs lost, it is no exaggeration to predict unprecedented suicides this winter – and next.

Dickensian pictures emerge in our minds. Thoughts of the Victorian poor, a glimpse into history, denying today’s reality.

please-sir

These pictures will continue to haunt us until we break the self-perpetuating neoliberalism. It is in our hands to change. Brave politicians must rid us of the neoliberalism has destroyed society, and finally reject this flawed argument, and reclaim democracy.

Welcomed in the eighties as Thatcher’s bribe to the workers, neoliberalism, many now realize the dangers of policies which have led to:

HOMELESSNESS : There’s no place like home

George Young, recently appointed government chief whip famously once said “The homeless are what you step over when you come out of the opera.” I wonder if he is aware of the drastic reduction in life expectancy of people living with no home? Has he considered which policies add to the crisis?

Homelessness Kills is an analysis by the University of Sheffield of the mortality of homeless people in 21st Century England

Homeless people under 45 have four times the chance of dying than their housed contemporaries, the under 55s three and a half times, and the under 65s two and three-quarter times.

Homeless people are three and a half times 
more likely to commit suicide than the general population.

Shelter’s examination of the reasons for homelessness cites personal causes, structural causes and the reasons given by homeless people. Personal causes for homelessness could be tackled by intervention, counselling services and support from Local Authorities. Statistics look to rise further due to cuts to these services by the Coalition government.

Structural causes for homelessness can be directly traced back to previous conservative governments. In contrast to the policies of the post-war Labour government which built tens of thousands of homes, Margaret Thatcher began to deplete the housing stock by selling off council houses. Councils were not permitted to replace the homes sold, so there was no return. Householders took on the debts of mortgages and bankers are the winners. New house-owners now, with mortgages around their necks, dared not strike against workplace injustices, so Thatcher’s grasp on trade unionists tightened further.

Today we see land destined for homes,and with plans in place, unworked for years because the market won’t deliver a profit, regardless of people’s needs. There are people in need of homes, yet houses are unaffordable. The construction industry is profit-driven. Houses were built and bought, not for homes for people but for profits for building companies, or as a source of investment, people living lives without meaningful jobs, just buying and selling houses, so forcing house prices out of people’s reach. As a result, a working person’s wage is insufficient and Housing benefit is claimed, but it is landlords who benefit. A sensible policy would be to build the homes people need.The immorality of buy-to-let mortgages is clear. TV programmes focus on how to make a killing out of house speculation, never quite realising the stark and haunting truth.

ENERGY: Privatisation – Pumps up the Power ?

The power which was derived from privatised companies was more than could be generated from coal or oil, it is their ultimate power by which they seek to control us – a plutocracy over governments and nations alike, and this is not power which will be easily relinquished.

The Big Six reap profits from immoral earnings as many people cannot afford to pay their ever bills.

Caroline Flint , Labour

“Since this Government came to power, energy bills have gone up by more than £200, and last week three of the big energy companies announced another round of price hikes, adding a further £100 to people’s energy bills this winter. People worried about how they will afford to keep the lights on, heat their homes or have a hot meal deserve a Government who understand their challenges and have the ideas to provide the change that Britain needs and the strength to see them through.”

Last winter the Independent reported that fuel poverty deaths were three times the government estimates.

Some 7,800 people die during winter because they can’t afford to heat their homes properly, says fuel poverty expert Professor Christine Liddell of the University of Ulster. That works out at 65 deaths a day.

Fuel poverty is defined as when someone needs to spend 10 per cent or more on heating their home.

The new total – calculated using World Health Organisation guidance and official excess winter death figures – is four times as many fatalities as happen in road accidents each year.

The previous government estimate put the total of deaths relating to fuel poverty at just 2,700 a year. That was included in a report last year by Professor John Hills, who is expected to produce his final recommendations on fuel poverty next month.

Yet the latest Office of National Statistics figures show that there were 25,700 excess winter deaths in England and Wales in winter 2010.

Meanwhile the latest WHO research suggests that 30 to 40 per cent of the excess winter deaths can be attributed to fuel poverty.

Cuts to welfare benefits for the vulnerable and disabled have already been attributed to be responsible for 73 deaths per week.

Reclaiming our energy sources and a renationalisation of Energy and utility companies must be on Labour’s agenda. Ed MIliband is acutely aware that the Energy companies’ political grasp in global power can be loosened. His policy of introduction of Feed-in-Tarriffs for micro-generation projects such as solar energy has already made a difference to fuel bills for many. Even this wet summer, solar panels can meet 80% of energy needs on some homes. Community projects can generate electricity to benefit local communities, and more research directed to renewable energy sources. Public buildings such as schools and hospitals could be self sufficient.

But the Coalition are tied-in to the lobbyists’ agendas, and their own self-interest. Rather than pursuing green policies, investment in jobs and lower energy costs for all, they opt for the short-sighted to “invest” public money into fossil fuels, fracking and nuclear energy. As many shiver this winter, it is the Big Six Energy Companies and their backers who benefit, yet again.

HUNGER

Like property, and energy, even food is now a commodity for financiers to gamble with. Shameful Food speculation has led to hunger around the world.

There is sufficient food to feed a world, yet so many go hungry, children born with no chance in life.

In the UK today, the number of people going hungry is escalating, the demand for food banks escalating. In Coventry out of 306,000 people, according to the city council, 59,000 are living on the breadline. (BBC Report) And with the UK economy in double-dip recession, the word breadline is starting to mean something literal. The callous withdrawal of welfare support by this government, removal of the safety net intended to provide help for the vulnerable is literally leaving people with a choice of starvation or suicide.

Welfare cuts will mean 350,000 children will lose free school meals. In desperation, many are driven to steal to feed their children.

Meanwhile, globalisation is putting an end to our high streets. As with the Big Six energy firms, supermarket giants are increasing their power, diversifying into non-food such as banking and insurance. Supermarkets control food prices and exert buying power, closing down local shops, and are then able to maximise profits on own brands.

I wonder, where are initiatives for home-grown food? Land, left idle unused and fertile should be made available for allotments, for community groups and co-operatives.

The stranglehold of neoliberalism sees no limits, yet the inevitable end to the insatiable greed of unbridled capitalism, is a disastrous chaos.

Dickens’ Oliver said, Please Sir, “Can I have some more?” We demand it.

http://www.crisis.org.uk/data/files/publications/Homelessness%20kills%20-%20Executive%20Summary.pdf

Download pdf Homelessness kills – Executive Summary

Shelter: The causes of Homelessness

Independent: ( February 2012) Fuel poverty three times government estimates

Morning Star: How the Big Six Energy Firms are holding us to ransom

Tribune Magazine: The Families on their knees in Breadline Britain

BBC: The growing demand for food banks in breadline Britain.

Think Left:

Why Barclays and Co “can’t get no satisfaction from food speculation”

This government is killing people, Think Left

Osborne and Cameron’s Big Deficit Myth

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At times, like Thursday’s release of the latest GDP figures, I begin to wonder whether I’ve really lost the plot.  The news headlines and reading the mainstream media financial sections just do not make any sense… they seem to take Expansionary Fiscal Contraction*, Osborne’s economic strategy, at face value …. and their only question, is how long will the recovery will take!

(*The clue is in the name … simultaneous expansion/ contraction.)

Perhaps unsurprisingly, the best example of this ‘madness’, is the Telegraph’s  GDP figures vindicate the Coalition’s fiscal strategy …(1)  This echoes David Cameron’s sound-bite that ‘Today’s figures prove that we’re on track!’  Whilst George Osborne tried hard not to sound triumphal when he said that  ‘The economy is healing.’

What?!!

Fortunately, the intervening days have brought plenty of reactions which chime more nearly with my understanding.  Michael Meacher’s description is, as always, particularly insightful.  :

Clearly the worst of the recession is far from over, but we have been festooned with an all-out PR blitz to convince us that it is.   What it really exposes is how utterly desperate Cameron is to escape the impression ( and the political consequences) of endless austerity whilst at the same time tightening the screw to make sure it bites even deeper. (2)

The simplest way to understand George Osborne’s economic strategy is to consider its analogy to ‘asset strippers’ like Romney’s private equity investment firm Bain Capital…

Asset strippers are a form of corporate raiders that focus their attention on a target company. The goal is to gain ownership and control of the company over time. Once the company is in the control of an asset stripper, various assets of the company are sold off, often in order to handle the outstanding debt incurred when gaining control of the company. The strategy involves making sure there is a strong chance that once a portion of the company’s assets have been sold, the remaining assets will still be sufficient enough to operate the company at a profit or make the company attractive to potential buyers. (3)

 Which suggests that George Osborne’s task is to keep a balance between totally crashing the economy and still ensuring that it is sufficiently debilitated to justify ‘austerity’, which in turn justifies privatizing public services, lowering taxes for the corporations and the rich, lowering wages and shrinking benefits…

Conservative economist and journalist, Ramesh Patel more or less agrees with this assessment:

Finally!  Exposed!  The Deficit Myth!  So, David Cameron When are you Going to Apologise?’ (4)

‘… as the truth is the greatest enemy of the a lie I urge you to share this on Facebook, Twitter, Blogs, text and email … So the truth can be discovered by all. Finally, have no doubt, people have been misled by the use of the following strategy:

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it” Joseph Goebbels

 What is the big lie that Patel exposes?

Cameron is playing the blame game to depress confidence and growth to justify austerity. Secondly, to use austerity as justification for a smaller state to gain lower taxes. Thirdly, to paint Labour as a party that can not be trusted with the country’s finances again. Therefore, we Conservatives will win a second term because, people vote out of fear. The latter strategy worked the last time in office (18 years) and will work again because, in the end, elections are won and lost on economic credibility. Hence, as people believe Labour created the mess they won’t be trusted again. (4)

To be honest, this is hardly news to left-wing bloggers but finally, the Osborne/Cameron lies about the economy are being refuted by one of their own.  As the quote suggests:

Everyone is entitled to their own opinions, but they are not entitled to their own facts.

  What are the three deficit claims that Ramesh Patel exposes as untrue?

Below are the 3 deficit claims – the mess. The evidence comes from the IMF, OECD, OBR, HM Treasury, ONS and even George Osborne. The claims put into context are:

CLAIM 1 The last government left the biggest debt in the developed world.

After continuously stating the UK had the biggest debt in the world George Osborne admits to the Treasury Select Committee that he did not know the UK had the lowest debt in the G7? Watch: Also, confirmed by the OECD Those who use cash terms (instead of percentages) do so to scare, mislead and give half the story.

Its common sense, in cash terms a millionaire’s debt would be greater than most people. Therefore, the UK would have a higher debt and deficit than most countries because, we are the sixth largest economy. Hence, its laughable to compare UK’s debt and deficit with Tuvalu’s who only have a GDP/Income of £24 million whilst, the UK’s income is £1.7 Trillion.

Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the global banking crises 2008 the debt had fallen to 35% – a near 22% reduction page 6 ONS Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling down?

CLAIM 2 Labour created the biggest deficit in the developed world by overspending.

Firstly, the much banded about 2010 deficit of over 11% is false. This is the PSNB (total borrowings) and not the actual budget deficit which was -7.7% – OBR Economic and Fiscal Outlook March 2012 page 19 table 1.2

Secondly, in 1997 Labour inherited a deficit of 3.9% of GDP (not a balanced budget ) and by 2008 it had fallen to 2.1% – a reduction of a near 50% – Impressive! Hence, it’s implausible and ludicrous to claim there was overspending. The deficit was then exacerbated by the global banking crises after 2008. See HM Treasury. Note, the 1994 deficit of near 8% haaaaaah!

Thirdly, the IMF have also concluded the same. They reveal the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It’s basic economics: when output falls the deficit increases.

Finally, the large loss in output occurred because the UK like the US have the biggest financial centres and as this was a global banking crises we suffered the most. Hence, the UK had the 2nd highest deficit in the G7 (Not The World) after the US and not as a result of overspending prior to and after 2008- as the IMF concur.

Claim 3 Our borrowing costs are low because the markets have confidence in George Osborne’s austerity plan and without it the UK will end up like Greece.

Yes, the markets have confidence in our austerity plan and that’s why PIMCO the worlds largest bond holder have been warning against buying UK debt.

The real reason why our borrowing costs have fallen and remained low since 2008 is because, savings have increased. As a result, the demand and price for bonds have increased and as there is inverse relationship between the price of bonds and its yield (interest rate) the rates have fallen. Also, the markets expect the economy to remain stagnate. Which means the price for bonds will remain high and hence, our borrowing costs will also remain low.

Secondly, the UK is considered a safe heaven because, investors are reassured the Bank of England will buy up bonds in an event of any sell off – which increases the price of bonds and reduces the effective rate. Note, how rates fell across the EU recently when the ECB announced its bond buying program. Thirdly, because, we are not in the Euro we can devalue our currency to increase exports. Moreover, UK bonds are attractive because, we haven’t defaulted on its debt for over 300 yrs.

David Cameron would like people to believe the markets lend in the same way as retail banks lend to you and I.

Overall, when the facts and figures are put into context these juvenile deficit narratives and sound bites (“mere words and no evidence”) simply fail to stand up to the actual facts. The deficit myth is the [most] gross lie ever enforced upon the people and it has been sold by exploiting people’s economic illiteracy. (4)

So, David Cameron when are you going to apologise?  But more importantly, when and how are we going to stop George Osborne in his economy-wrecking, asset-stripping spree?  The economy is currently foundering because of a lack of demand, not the deficit or government overspending.  The last word is left to Michael Meacher MP:

The root cause of this global dilemma is that for the last 30 years, growth under conditions of neoliberal capitalism has been driven by financialisation of the economy, in particular the use of debt to create demand.   It has been assisted also by steadily phasing out constraints on trashing the environment and by mis-pricing non-renewable natural resources like oil and water, all in the false name of puffing up demand and thereby future profits.   Debt does allow consumption and investment to be enhanced in the short term, but of course it has to be paid back in the future.   It warps the production-consumption balance between the present and the future, and if allowed to get out of hand generates unsustainable imbalances.   This is exactly what has happened…..  Expansionary fiscal contraction, Osborne’s fantasy model, has been revealed as the pretence it always was.  (5)

[Emphasis added]

Related Posts:

https://think-left.org/2012/09/25/the-fundamental-deceit-of-theres-no-money-left/

https://think-left.org/2012/08/20/has-george-osborne-been-taking-trans-atlantic-lessons-from-the-jude-wanniski-and-the-republicans/

Cameron and Osborne dwell on Bullshit Mountain, UK

https://think-left.org/2012/10/15/how-to-be-a-deficit-owl/

THE UK’S BUDGET DEFICIT IS RISING NOT FALLING

(1)  http://www.telegraph.co.uk/comment/telegraph-view/9633368/Good-news-on-GDP-bad-news-for-Labour.html

(2)  http://www.michaelmeacher.info/weblog/2012/10/camerons-worst-of-recession-is-over-will-come-back-to-haunt-him/

(3)  http://www.wisegeek.com/what-is-an-asset-stripper.htm

(4)

http://www.huffingtonpost.co.uk/ramesh-patel/growth-cameron-austerity_b_2007552.html

(5)  http://www.michaelmeacher.info/weblog/2012/10/does-anybody-know-where-the-long-term-growth-is-to-come-from/