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Miliband Pledges Economic Deflation

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http://www.independent.co.uk/news/business/news/labour-pledges-to-cut-energy-prices-by-up-to-10-per-cent-if-it-wins-power-at-general-election-10104935.html

Gas and electricity bills would be cut by up to 10 per cent next winter if Labour wins power in May, Ed Miliband will promise tomorrow.

The Labour leader will announce that his party would rush through legislation forcing the energy regulator Ofgem to ensure that the fall in the global oil price is passed on to households and business by next Christmas.

The “Big Six” energy firms have been accused of not sharing the benefits of falling wholesale prices with their customers. Labour claims its proposed price cut would be worth at least £100 a year to a typical family, and a total of £2.5bn to householders and business. The final decision on price cuts by individual firms would be made by Ofgem, which would have a duty to ensure “fair prices”.

In 2013, Mr Miliband announced that an incoming Labour government would freeze energy prices for 20 months. It was one of his most popular policies, with opinion polls suggesting it enjoyed the support of 80 per cent of the public.

Given how volatile energy prices can be this could be a very stupid pledge.

Not sure how I will spend my extra £8.33 a month, any suggestions.... Wait a whole year and you could buy some premium bonds.

I bet Ed doesn't mention the deflationary effect this might have on the economy.... Doesn't fit in with the 2% inflation target for the BoE.....

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£100 a year, that would have been worth having in about 1975. Meanwhile back in 2015 it costs £15k-£20k of net income to rent an average house in London/SE for a year.

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http://www.independent.co.uk/news/business/news/labour-pledges-to-cut-energy-prices-by-up-to-10-per-cent-if-it-wins-power-at-general-election-10104935.html

Given how volatile energy prices can be this could be a very stupid pledge.

Not sure how I will spend my extra £8.33 a month, any suggestions.... Wait a whole year and you could buy some premium bonds.

I bet Ed doesn't mention the deflationary effect this might have on the economy.... Doesn't fit in with the 2% inflation target for the BoE.....

Presumably you would prefer to pay more for your energy?

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The countries with the cheapest energy in Europe (Finland, Sweden, and France) all have a mix of private energy firms alongside a state energy firm.

That actually seems to work. So why not that?

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Presumably you would prefer to pay more for your energy?

It's reasonable to point out that politicians are just fiddling around at the edges and not getting into the substance of the 'cost of living crisis' or whatever you want to call it.

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Presumably you would prefer to pay more for your energy?

I would like consistent policy, to have a 2% inflation target to met means that another area say food is going to have to increase by more than 10% to compensate for the deflationary statistical effect of energy prices going down. Or are you saying this isn't a problem?

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Ed Milliband, like all politicians, don't seem to understand market economies. You can't simply write a law to force people to do something!? It doesn't work that way.

In the end its about creating competition in the market place to force industries to change or go out of business. Do you think industrialists gave a toss about using child labour in the 1800s? The laws changed because they knew they needed a skilled work force anyway and 12 year olds would not be able to supervise large production lines - they needed more educated staff. So the richest started supporting schools and education in an effort to build a workforce. Note that the government came in after this and tried to claim education was their priority.

Government doesn't control anything....they are simply all in it to appear to make themselves king. Their policies can be bought and sold by lobbyists when they are in power. They have no interest in what people actually want - its what they want that counts.

FYI on Sweden,Finland France (Sweden is mainly hydroelectric and nuclear, Finland gets oil from Russia - we could probably get it cheaper to if we bought it from them too but the USA wouldn't like it, France is a basket case that is heading to bankruptcy then they can all enjoy 10 hour work weeks and 8 weeks of holiday)

Edited by katchytitle

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The countries with the cheapest energy in Europe (Finland, Sweden, and France) all have a mix of private energy firms alongside a state energy firm.

That actually seems to work. So why not that?

The USA has electricity costs that are about half of those in France without any state energy firm, so why not that?

Government constraints on energy production have a much bigger impact on the cost of electricity than the ownership structure of energy distributors. Whether the energy companies are owned by the state or private investors is pretty much irrelevant if the government bans fracking to please some aged nimbys or closes productive coal-fired plants so that China can increase their CO2 emissions even more without drowning themselves.

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The countries with the cheapest energy in Europe (Finland, Sweden, and France) all have a mix of private energy firms alongside a state energy firm.

That actually seems to work. So why not that?

France is 80% nuclear with quite a good hydro capacity due to the mountains. You'd have to look at who is going to pick up the bill for the nuclear plant closures... one of the current government's pledges was to reduce nuclear capacity to 50% btw. But, if countries are delivering energy cheaper it is certainly worth taking a look at what they are doing. Maybe they are not building loads of wind farms with a "green" levy?

My worry with a 100 quid off yer next bill rubbish is that it will impinge on the development of new capacity in the UK which the country needs to ensure security of supply.

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I liked Miliband's defense of his "second" kitchen... oh its not a real kitchen, it is just a broom cupboard where we can prepare "goûter" and coffee for the kids. Talk about digging a hole. The kitchen is bigger than a lot of people have renting in London I bet.

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£100 :rolleyes:

When I hear politicians spouting this sort of economic illiteracy, I despair. Talk about papering over the cracks.

Not just a Labour failing , the LibCons regularly spout this nonsense as well in an attempt to grab a headline in the Mail or Sun or whatever....depressing stuff.

Edited by Agentimmo

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Well I did that. One issue was Miliband's price freeze pledge. Energy companies rushed out to buy futures contracts covering the 20 month period promised by Miliband and this has locked in high prices. Thanks Ed.

But, if countries are delivering energy cheaper it is certainly worth taking a look at what they are doing

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Mr Miliband will tell voters: “The cost of energy to the ‘Big Six’ firms fell by 20 per cent. Your gas bill fell by between one and five per cent. Your electricity bill probably hasn’t fallen at all. What better evidence do we need of the chronic over-charging, the broken market and the rip offs being faced by millions of families and businesses across Britain?”

and the energy suppliers dated any of their feeble price reductions for after the worst of winter. Fortunately the winter was mild this year (despite newspapers again predicting it would be the coldest ever to try to boost sales of stuff like anti-freeze etc).

Milliband's "promise" is what Cameron and Clegg would be "promising" if they were in opposition - that is before watering it down/reneging on it if gaining power.

Energy prices should be far lower already due to wholesale prices falling (and so should petrol prices despite the recent petrol price fall).

Brent crude is now at about $57.

Crude_Oil_Inflation_Adjusted_Historical_

Edited by billybong

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It's reasonable to point out that politicians are just fiddling around at the edges and not getting into the substance of the 'cost of living crisis' or whatever you want to call it.

+1.

God forbid he talks about the elephant in the room.

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+1.

God forbid he talks about the elephant in the room.

None of them will talk about it.......they only want to save you £100 a year on fuel costs when the price of fuel is falling anyway.....the lot of them about as good as a chocolate teapot. ;)

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Hmm Gas and Electric are supplied by private companies. I spend less than 700/year on both.

My council tax is 1200. Why cannot he cut 30% of that instead?

Oh, and 30% of my income tax.

There's a smell of LAtin American popular politics about all this - Chavezisimo , Millibandisimo about it all all.

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