Realist, not conformist analysis of the latest financial, business and political news

A Quite Glorious Idiocy Over Greening Households

A Richard Murphy

The idea that we should do something about climate change seems sensible enough. Assume that it’s all true – we do have to do that before it’s worth doing anything. But after we’ve agreed to that there comes the question of, well, what is it that we should do?

Around here we argue that we stick a carbon tax on and we’re done. Because the problem is that emissions aren’t included in the price system – externalities – and so if we get them into the price system then we are indeed done. Some find that not a persuasive argument.

It’s also possible to be entirely silly in designing what we should do. As with Colin Hines and Richard Murphy here:

There is no better example of what Larry Elliott perceptively terms “capitalism for dummies”, whereby our political systems self-destructively fail to tackle the climate and biodiversity crisis, than the unspent 95% of the green homes programme (We’re on a collision course with the planet. But with public support, that can change, 10 February).

To reverse this trend, and overcome the social and employment effects of the Covid pandemic, will require a new form of growth – one which only supports an increase in economic activity that improves social conditions, creates secure, adequately paid jobs and seriously addresses the environmental crisis.

That green homes programme has indeed suffered from a problem:

The government’s flagship programme for a green recovery is in turmoil after it was revealed that hundreds of millions of pounds are being withdrawn from its green homes grant programme.

Ninety-five per cent of the £1.5bn pot provided for householders in England to make their homes less carbon intensive remains unspent due to long delays in giving out grants to householders and making payments to installers.

Some householders have been waiting nearly five months for the grants to be approved and installers say they have had to lay off staff because they are owed tens of thousands of pounds by the scheme, which is run by an American global consulting firm, ICF.

We find that we can’t in fact spend the money already allocated. Well, OK, so what should be our solution here? Back to Hines and Murphy:

Just as it appears that the government is beginning to take back control of the NHS from inefficient aspects of private-sector involvement, so the same kind of “smart, activist state” is required to decarbonise and make energy-efficient the UK’s 30m buildings. Such a massive programme providing jobs in every constituency could be paid for by offering green Isas at an interest rate of, say, 1% to attract huge swathes of the £70bn invested in this annually. This programme could be underwritten by green quantitative easing, whereby the Bank of England electronically creates the money involved and no government debt is incurred.

Such a multibillion-pound programme could be rolled out in time to act as a global exemplar for Cop26 in Glasgow this November. “Saving for the planet” is also likely to be extremely popular politically, given the growing public support for tackling the climate crisis.
Richard Murphy Visiting professor of accounting, Sheffield University Management School and Colin Hines Convenor, UK Green New Deal Group

Right. So, we’ve only been able to spend £75 million of the £1.5 billion allocated. The solution is to throw £71 billion at the problem.

anyone else see a problem here?

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Ltw
Ltw
8 months ago

I’d post on his blog about the woeful experience we had in Australia with a very similar scheme (lots of houses burnt down and 4 deaths, and I know you know about this) but I’d just get banned.

The not being able to spend the money is virtue! Unfortunately we managed to. Anyone who came to my old place offering free insulation got held off with a pitchfork. “But it’s free!” they’d say. And I’d say “50 year old wiring, stay out of my roof space”

Boganboy
Boganboy
8 months ago
Reply to  Ltw

They’d have needed to wear space suits to smash up my roof and sealed plastic bags to cart it away in. So I decided not to get the solar panel they were pushing.

Of course there was also the $A200 000 cost.

Leo Savantt
Leo Savantt
8 months ago

One could be accused of being boring, yet it is worth risking that. UK anthropogenic CO2 emissions are one part in a million of the atmosphere. Nothing that the UK does in respect of the life giving trace gas will have any impact on the climate whatsoever. Never-the-less the impact on our health, wealth and security caused by obsessing about this non-issue is as serious, suicidal and unnecessary as it it completely stupid. CO2 is not a pollutant, it is not a problem and the UK should get fracking as soon as is possible, whilst simultaneously deconstructing the bird and… Read more »

Boganboy
Boganboy
8 months ago
Reply to  Leo Savantt

A pleasure to see some sense. If only we had some here in Oz.

Spike
Spike
8 months ago

No, “we” don’t argue for a carbon tax, except in the Editorial We. “We” don’t even “assume that it’s all true.” Science neither predicts the future nor tells us what the percentage of human causation is, until we find a control Earth without humans. The “science” is computer models, selected and published on the basis that their output is as scary as the Imperial College crap model on Covid-19. It is nothing but the next “existential crisis” to seize power over our personal decisions.

Michael van der Riet
Michael van der Riet
8 months ago
Reply to  Spike

Tim’s entire argument for carbon tax is based on one premise: that externalities are not included in the price system. But as hefrequently and vociferously argues, externalities are always included in the price, in the form of knowledge. Tim, like his oppo at the tax network place, is immune to countervailing facts and reason. However as the boss of this blog he is entitled to hold whatever opinions he likes, provided of course that he does not expect us to pay for the dubious honour.

Spike
Spike
8 months ago

The Green movement is not based on knowledge but on a fashion statement that it would be Nice if we left no detectable mark on the atmosphere, even a carbon mark that boosts plant growth. The carbon tax punishes deviations from this fashion. “Not expect us to pay”? Find a way to tax manufacturers that we will not wind up paying.

Esteban
Esteban
8 months ago

FWIW I don’t believe in Manmade Catastrophic Global Warming either. But I think Tim has a point that IF you do, the correct response is a carbon tax, not all the myriad gov’t schemes we’re being sold. I do wish he’d be stronger on the first bit, that the “IF” is a big deal.

But to the 2nd point, I don’t think externalities are always included in prices, that’s why Pigou taxes were created. IF you believe in CMGW the price we all pay for coal & oil does not include the cost of those future harms.

rhoda klapp
rhoda klapp
8 months ago
Reply to  Esteban

Externalities include something like 20% better plant growth. That is positive, isn’t it? The negative side of a little hypothetical warming is zilch.

Spike
Spike
8 months ago
Reply to  Esteban

Esteban, that’s not why Pigou taxes were created. Pigou taxes were created, as all other taxes were created, so that politicians could spend our earnings. Pigou’s rationale is simply a useful sales pitch: Market prices don’t reflect what the people really want, or should want, and we are merely “fixing” this. Like “sin taxes,” government is doing well by “doing good.”

jgh
jgh
8 months ago

65% of the price I pay for petrol is tax. I’m already paying the carbon externalities, and more so.

Michael van der Riet
Michael van der Riet
8 months ago

The idea that we should do something about alien abduction seems sensible enough. Assume that it’s all true – we do have to do that before it’s worth doing anything.

rhoda klapp
rhoda klapp
8 months ago

Wouldn’t a financial chappie demand due diligence before he spent money on this? Why has this step been skipped?

Addolff
Addolff
8 months ago

“Assume that it’s all true”.
Tim, how about, just for once, you assume it ISN’T all true and we are being had.

jgh
jgh
8 months ago

I’m going to want more than 1% in anything I lock my money into.

MrVeryAngry
MrVeryAngry
8 months ago

Murphy is quite mad. Isn’t he? Or am I missing something?

Quentin Vole
Quentin Vole
8 months ago
Reply to  MrVeryAngry

He’s as mad as a box of frogs. But the trouble is he’s not the only one, and some of them are (unlike Spud) highly influential.

TD
TD
8 months ago
Reply to  Quentin Vole

Just who exactly is this Murphy dude?

dodgy geezer
dodgy geezer
8 months ago

Do I see a problem here?

Not at all, Mr Worstall. You said that we should assume that climate change dangers are all true?

In that case, our current understanding of mathematics must be false, since none of the sums provided by the greens in support of their hypothesis are correct if you use current maths. That being the case, 71bn can just vanish in the air, or be converted into unicorn dust.

I do not think you understand how far science and economics has been corrupted by this vile movement. The time for logical argument is long past.

Phoenix44
Phoenix44
8 months ago

The whole thing is a joke – a fabulous example of people being bribed by their own money to do something they don’t want to do. The reason the fund iz unspent is that it only covers roughly half of the cost. Very few people fancy spending £5,000 to get maybe £200/year back in savings. Those with the £5,000 generally not being entirely stupid.

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