If it’s right for the state to intervene in one broken market, why not apply the principle across the board? When Ed Miliband unveiled his modest proposals as Labour leader to limit energy bill increases and reform the energy market, the Tory response was hysterical. The party and its outriders – otherwise known as most of the British press – frothed about Marxism and the Soviet Union. It was a striking example of how Britain’s right had increasingly adopted the unhinged intolerance of their US counterparts, suggesting even modest state interventions would end in the resurrection of Joseph Stalin and the nationalisation of your gran.
Yet now it’s the Tories who are floating a cap on energy bills. Quite a U-turn, then. Ah, but it isn’t the same as a proposal we described as full-blown Marxist, they claim. And they’re right: the Tory offer is clearly less effective. And there are three rather big caveats attached to it.
First, the electorate would do well to remember that Theresa May struggles to stick to pledges: consider the snap election she repeatedly said wouldn’t happen, her U-turn on raising national insurance, and her net immigration target of tens of thousands. Second, May’s own MPs are preparing to further water down her energy commitment. Third, if Britain crashes out of the EU with no deal – a likelihood increased by May’s attempt to destabilise relations with EU neighbours for electioneering purposes – then we may be reduced to becoming a tax haven stripped of social provision. Rather than the state intervening to fix broken energy markets, Britain will suffer a never-ending market riot.
But the Tories’ U-turn on our broken energy market offers an important political opening: it is a concession that the Tory privatisation of energy was a failure. The premise of the Tories’ privatisation was that it would benefit the consumer. But the Tory party has just confessed that its privatisation has failed, and therefore it has to use the muscle of the state to fix it.
And in doing so, it has left a sizeable dent in the entire economic philosophy that has been imposed on Britain since the late 70s. The state gets in the way, goes the mantra; the state distorts outcomes; it’s inefficient; it’s a barrier to enterprise. The market must be left to its devices, says this dogma, as it will automatically lower prices and improve service for the consumer. But we – the left – were right all along. The Tories demonised us, but we were right and they have just admitted as much. And if the market isn’t the right way to supply energy at a fair price, how can it be correct elsewhere?
The Tory privatisation of the railway system is perhaps the most emblematic example. It is clearly a failure. Many Tory voters advocate renationalisation, as does rightwing polemicist Peter Hitchens. The taxpayer spends more on the privatised system than in the days of British Rail; ticket prices are among the highest in the world; journeys are overcrowded; and whatever improvements have taken place have been underwritten by the state. The most efficiently run franchise was the publicly owned east coast main line, but then that was privatised. If the energy market is broken, then our railway system certainly is too. So why not apply the same principle?
Similarly, housing. Outside wartime, housebuilding is now at its lowest level since the early 1920s. Hundreds of thousands of people languish on social housing waiting lists, billions in taxpayers’ money is spent on subsidising landlords instead of laying bricks, and the private rented sector offers a fatal combination of high rents and low security. The market has failed; it is broken. If the Tories were consistent, then they should intervene.
Or, indeed, what about an industrial strategy? Many of Britain’s communities that were hammered by rapid deindustrialisation from the 1980s onwards – a lot of which then decisively voted to leave the EU – have yet to recover. Governments of all political stripes adopted a “hands off” approach: the market knew best, you see, and the state would only pick winners and losers. Germany’s approach, on the other hand, has been to strategically intervene, promoting sectors such as renewable energy, which have delivered skilled jobs as well as taking on the climate change crisis.
Can anyone really look at Germany and credibly argue that state intervention has reduced its economy to a basket case? If the Tories accept that market failure requires state intervention, then a “let the market run riot” approach to industry needs discarding.
I could go on. What about bus deregulation, which caused a collapse in journeys outside London, leading to irregular and expensive bus services? What about the financial system that plunged this country into economic tragedy? What about the promotion of markets and competition in the NHS, which has led to the growth of an inefficient bureaucracy to manage all the chaos?
The Conservative announcement on energy prices is not a policy, it’s a confession. Their dogma of rolling back the state in favour of unfettered market forces does not work. After this admission, there should be consistency. Use the power of the state to fix every broken market. It cannot be credibly argued that energy is the only failing market, and thus the only one requiring state intervention.
Whether the Tory announcement on energy bills is for cynical political purposes or not, it doesn’t matter. They have recognised that their own dogma has failed. And the only logical conclusion is that if it’s right to retreat from that dogma in the energy market, it’s right to abandon it everywhere.
