Osborne learns to his cost that private markets don’t oblige

It’s really rich that Osborne has tweeted: “Vital this (drop in the oil price) is passed on to families at petrol pumps, through utility bills and air fares”.   He’s spent the last 5 years lambasting Labour in support of the Tory free market mantra that the State should get out of the way and leave it all to the markets.   Now rather pathetically he’s pleading with market operators to show a dose of fair play rather than exploit a windfall for their own interests which is the natural instinct of capitalism.   It takes some gall for Osborne to try to jump on the bandwagon at the last minute, four months before the election, when he’s been aggressively promoting ruthless self-interest throughout his chancellorship.   But it certainly shows how desperate the government have become over the cost of living issue and how readily their poll lead on economic matters may slip away from them especially given the increasing signs that Osborne’s ‘recovery’ is fading (with a likely growth of only 0.5% in the 4th quarter of last year).

Much good however will Osborne’s appeal for fair shares do him.   Petrol prices at the pumps have been cut by less than a quarter of the 60% fall in oil prices.  Utility prices have come down even less.   Those who operate in the market do so to maximize their own gains, and expecting them now to pull in their horns to appease Tory electoral prospects is not in their nature.   Osborne is hoist on his own petard.

Ironically he has also been beset within the Coalition itself for his neglect of pure market principles.   Ed Davey, the LibDem energy secretary, keen to burnish his reputation as a right-wing leadership candidate, ticked him off for criticism of energy companies by politicians which would “damage markets, investment and the economy”.   The rather lightweight Davey opined that competition was the key to driving down energy prices and that the Competition and Markets Authority regulator was already holding an inquiry to tackle any remaining problems in the energy market.   What he neglected to say was that there have already been 18 investigations into the UK energy market, none of which have had any noticeable impact.

Clearly the government is still in disarray about how to respond to Labour’s demand in the Commons debate today demanding fast-track legislation to give the energy regulator Ofgem powers to cut energy bills when wholesale costs fall.   Whether that is sufficient to achieve proper regulation of a private energy market without taking one of more of the Big Six into public ownership is another question.    But it does show the government is on the run over energy costs, and appeals to decency and fair play will only get Osborne blown a raspberry.

5 thoughts on “Osborne learns to his cost that private markets don’t oblige

  1. I see yesterday thet the little tory oarty did just vote alongside their big brother the real tory party for more austerity isnt life strange has I said before this party untill its eds an randr blairs babys are shiwn the door then we has the poor labour supporter’s are sent into annihilation has new austerity measures cull us of just like rtu ids culling of the stock jeff3

  2. Surely what we really need to do, (and I’m sure Miliband and Balls will completely agree with this,) is to now pour loads of tax payers money into these companies, (in the form of even more tax breaks and other government hand outs,) to protect their profits and financial interest of their share holders.

    Once again, (as with the banks,) this demonstrates, that these wretched privatized companies are now operating with all the financial liabilities to the taxpayer of a fully nationalized industry, but with non of the advantages to their customers or to the taxpayer.

    In effect it could even be argued that the British taxpayer will end up paying the fines levied by the Americans for all the environmental damage done there, as result of BP cutting costs and lowering safety standards to maximize shareholder profitability in short term.

    Heads we win, Tails you lose.

    To be paid for yet again by cutting public services and subsistence benefits for those most vulnerable and most desperately in real need; doubtless under the spurious pretext of protecting jobs.

    Meanwhile Tesco are closing 43 store and selling off their broadband business, (to Talktalk with further redundancies and so on,) and this:

    Tough start to 2015 for logistics industry.

    The Christmas and New Year period was particularly bleak for the road transport industry. City Link appointed administrators on Christmas Eve, informing staff on Christmas Day, beginning a process that saw 2,356 people made redundant days later. Some 371 people will remain with the failed parcel carrier for now to assist winding down its operations. Rivals APC Overnight, TNT UK and DX Group have all said they were doing what they can to provide employment opportunities for not just former City Link staff, but the 1,000 self-employed contractors.

    Compounding a tough start to the year sector skills council Skills for Logistics (SfL) has also been placed into administration, citing pension deficit pressures and the struggle to replace lost government funding as the reason for its demise. The not-for-profit organization worked with employers, government, Local Enterprise Partnerships and training providers in the logistics industry in order to plug skills gaps and bring skilled, new employees into the industry.

    And so on.

  3. Osborne asking for “fair play”!? I’m surprised he’s even familiar with the notion! Hasn’t he just announced even more tax breaks for the rich, should they win the election!? (Which hopefully will be unlikely).

    The fuel companies are saying they buy or order their supplies two years in advance, so the fuel that people are currently using was bought at higher prices than those of today. They’re also wary of reducing the price, as Ed Miliband has stated he intends to freeze prices, which could put them out of pocket (although I think he’s now said he intends to cap prices instead).

    Anyway, the sooner we can become less reliant on oil the better.

    BP want to make people redundant in Scotland because the price of oil has crashed, and the government is now talking about giving them tax breaks, to save these jobs. (Hopefully there’ll be a watertight guarantee that the workers will then be kept on).

    So why are jobs being lost? Presumably they still need people to deal with the oil up there, or are they holding back in the hopes that the price will eventually go back up? (Which might not happen). All this at the taxpayers’ expense, it would seem, even though BP must be one of the very largest companies in the world.

    As for the cost of living index, am I right in thinking that this includes the cost of air travel? Many people can’t even afford to buy or even renew their passports, or even have holidays let alone fly anywhere! There should be a cost of living index that only covers basic costs, as we now have so many people who can’t even afford the very basics needed to live on. A scandalous situation.

    Looking on the bright side: anything that makes Osborne look bad just before the election is good news for the rest of us!!

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