[andy popp]

For shareholders watching Centrica's fortunes tank for year after year since 2013 it must have been like watching money being vaporised in the void of a failing business.

And now in the one year they turn a hefty profit due to force majeure completely outside their own doing and, Nigel-forbid, want to send a small part of some of that profit back to long-suffering shareholders

One is tempted ask: how you like them apples? Shareholders have three options available to them: exit, voice, and loyalty. You're a great advocate for highly active personal investment strategies Pete (I really mean that, not as some backhanded compliment). Moreover, you know as well as anyone that markets punish, thought to be one of their great virtues. So I'm genuinely a little surprised to read you make this plea on behalf of Centrica's shareholders on the basis of their sheer haplessness.

[Nigel]

I'm going on holiday to a commune in Cuba shortly so I'll try to keep it brief..... My original point was that the Labour strategy with the rail strikes - of not handing any ammo to the right wing rags - might seem attractive in a 1997 sort of way, but I offer the counterpoint that this is not 1997. As danm rightly said things might well get very uncomfortable this winter coming. If other unions e.g. teachers, fire brigades etc. go on strike for better pay, all I ask is whether Labour aping Grant Schapps and keeping quiet is a good plan? Obviously lots of you think yes but I thought the counter view of getting ahead of events with a more full throated defence of why the population of workers (and voters) should not have to take *another* pay cut due to circumstances out of their control would be worth considering. If Labour agree with the Tories that people should take a pay cut this year then equally they should explain why? We know the Tories don't give a shit but people can join the dots and see that an alternative might be possible *if someone makes the case*. To refer back to my 1997 reference - Labour has lost Scotland and ruled out a deal with the SNP. It is averaging around 10% max higher in the polls but needs to be consistently much higher to win a majority in England (Blair was usually 20+% easily). Starmer is more or less level pegging popularity wise with the two new PM candidates. Hopefully the long term strategy is correct but atm it does seem a bit like blind trust...

Sean - lots to comment on but no time so two things. There seems to be a lot riding on the next GE being done when "due" in two years. With fixed term parliaments act gone now that is a gamble. Other thing is in amongst the block text on Gini coefficients you quoted this:

"The wealthiest 10 per cent of households owned 43 per cent of all the wealth in Britain between April 2018 to March 2020, data from the Office for National Statistics showed on Friday. In contrast, the bottom half of the population held only 9 per cent.

"However, over the past 14 years wealth inequality measured by the Gini coefficient has remained by and large stable, according to the ONS.

The Gini coefficient staying the same is not a cause for celebration in the context of the first sentence! Rather it is a scandal that things haven't got better. Surely in light of that there is space for something a little more distributive? I suspect you agree but thought it worth highlighting.

Pete - you started your own thread for long posts about share prices. On the politics thread I would say that the potted version of your post - "won't someone think of the poor shareholders" - is perhaps not the slam dunk you think it is, in the real world.

[Wellsy]

We are approaching loads of crises in this country that are all tangentially related

1) energy, cost of it and where we get it from. The government has no solid energy policy and is focusing on building hugely out of date reactors and ditching renewables to satisfy Mail readers. I'm pro nuclear but numerous experts are clear on this; UK gov energy policy is madness, and the problem is getting worse.

2) Cost of living. Related to the above but wages are decking out compared to CoL, energy, fuel, food etc. Brexit compounding terrible gov decisions like getting rid of gas reserves and complete lack of willingness to engage in market intervention. And this will only get worse.

3) Brexit, a disaster in of itself. Currently making just about everything worse and nothing better. And it's getting worse.

4) Public services are languishing in funding holes, the NHS has never been struggling in the modern era like this. Ambulance responses, GP access, waiting lists, it's all bad and due to get worse

5) numerous more problems caused by government made up complete amateurs who are utterly incompetent. Forget ideology, it's actual sanity where these people fall down

There is no plan. There is no upcoming good news. This is not getting turned around, not by government policy. I'm not particularly bothered about whether this guy went to a picket line or not I'm desperate for some sane people to win an election and at this point I don't really care who it is but it's almost certainly going to have to be someone wearing a red rosette.

[petejh]

Nigel, from one long-poster to another… I posted to illustrate some of the reality behind the ‘poor optics’ of an energy company making profit while people are feeling the pinch and being angry. Which I’m sure you probably knew. 

Andy, I agree - the market giveth and the market taketh away. That’s largely the point behind this issue - the market has taken away from anyone unfortunate enough to be involved with Centrica’s business for the last decade. Now the market has given, but forces outside the market want to take it away again because they feel it isn’t fair on them - or at least they want to be *VERY ANGRY* about it. This is your point except subverted - it isn’t market forces acting when people are expressing disgust at Centrica making profits from high energy prices - it’s an exterior anti-market force.
Funny how those anti-market forces were absent in 2020 when Centrica made a pre-tax loss of £1.1 billion. (Although some will be used to offset profits in subsequent years.)

[seankenny]

Shareholders have three options available to them: exit, voice, and loyalty.

You are Albert Hirschman and I claim the Daily Messenger prize.

[Nigel]

I'd rather not get bogged down on Centrica but to the accusation that I'm being selective, so are you. The share pice has been dire over ten years yes. However if you bought in 1995 then you would have seen a 400% increase at the all time high in 2013. No link but you can look it up, We are now back to roughly where it started, which for a utility is probably as it should be I would argue. As Andy says if you bought in 2013 then that's your look out.

[seankenny]

I thought the counter view of getting ahead of events with a more full throated defence of why the population of workers (and voters) should not have to take *another* pay cut due to circumstances out of their control would be worth considering. If Labour agree with the Tories that people should take a pay cut this year then equally they should explain why? We know the Tories don't give a shit but people can join the dots and see that an alternative might be possible *if someone makes the case*.

How does that alternative actually work? Energy inputs are more expensive. There are problems with supply chains. Brexit has had a negative effect. The U.K. has a productivity problem. All these things make us poorer in real terms. All are hard to solve. I’m afraid the only alternative I see to below inflation rate pay rises for most people is higher unemployment which is much more selective.

That’s the short term choice: a bit of pain for everyone, or a lot of pain for a smaller number of people.

There are lots of things we could and should do in the long term to try to deal with those problems, and I totally agree that the Tories won’t (because their voter base doesn’t care about the health of the economy as long as their savings and house prices are unaffected). And we should absolutely be using fiscal policy to reduce the suffering of the very poorest (which the Tories won’t do, or might do but way too late). But magically making people not poorer immediately strikes me as unlikely.

Sean - lots to comment on but no time so two things. There seems to be a lot riding on the next GE being done when "due" in two years. With fixed term parliaments act gone now that is a gamble. Other thing is in amongst the block text on Gini coefficients you quoted this:

"The wealthiest 10 per cent of households owned 43 per cent of all the wealth in Britain between April 2018 to March 2020, data from the Office for National Statistics showed on Friday. In contrast, the bottom half of the population held only 9 per cent.

"However, over the past 14 years wealth inequality measured by the Gini coefficient has remained by and large stable, according to the ONS.

The Gini coefficient staying the same is not a cause for celebration in the context of the first sentence! Rather it is a scandal that things haven't got better. Surely in light of that there is space for something a little more distributive? I suspect you agree but thought it worth highlighting.

Okay, as I said above, the drivers of wealth and income inequality are very complicated. For a start, inequality in the U.K. has stayed constant for a long time, basically since the 1990s. That is not great but it is an achievement when you compare it to the US 

Secondly nearly everywhere has high wealth Ginis because it is just generally hard for the bottom couple of deciles to obtain (and more importantly retain) assets under nearly any political economy. And as I said above, many counties with strong welfare states have high wealth inequality because much of the population feels no need for a private pension (a lot of wealth particularly at the higher end is in pensions). So you could get a Scandinavian outcome which you’d like and this particular indicator would probably go the “wrong” way.

On income inequality, I think there is clearly a very strong argument that tax structures play a very large part. But - and this is a point that is uncomfortable for many on the left - there is also an element of income inequality caused by technological changes affecting the labour market. These changes are very resistant to policy. Very few counties have managed to buck this trend and I doubt their methods of doing so are possible in the U.K.

I think the U.K. does have a lot of room for a more distributive tax system but that has its limits as to what it can deliver, ie you’re always going to be disappointed! 

[andy popp]

Now the market has given, but forces outside the market want to take it away again because they feel it isn’t fair on them - or at least they want to be *VERY ANGRY* about it. This is your point except subverted - it isn’t market forces acting when people are expressing disgust at Centrica making profits from high energy prices - it’s an exterior anti-market force.

I'm not sure it's possible to neatly separate forces interior and exterior to markets, but that's probably a debate for another day. One final point, the public have a long history of judging markets on their fairness, or morality. So long as markets are not perfect, automated mechanisms then questions of affect and morality will enter into them. C18th food rioters would seize grain, take it to market and sell it at fair or customary prices and at proper weights. They didn't object to markets, they objected to markets they perceived and felt to be rigged. They objected to engrossers - profiteers. Right or wrong, it's hardly surprising people are reacting in that vein today.

[Offwidth]

Nigel, from one long-poster to another… I posted to illustrate some of the reality behind the ‘poor optics’ of an energy company making profit while people are feeling the pinch and being angry. Which I’m sure you probably knew. 

Andy, I agree - the market giveth and the market taketh away. That’s largely the point behind this issue - the market has taken away from anyone unfortunate enough to be involved with Centrica’s business for the last decade. Now the market has given, but forces outside the market want to take it away again because they feel it isn’t fair on them - or at least they want to be *VERY ANGRY* about it. This is your point except subverted - it isn’t market forces acting when people are expressing disgust at Centrica making profits from high energy prices - it’s an exterior anti-market force.
Funny how those anti-market forces were absent in 2020 when Centrica made a pre-tax loss of £1.1 billion. (Although some will be used to offset profits in subsequent years.)

The execs in centrica haven't done so badly compared to public sector management pay; profits were made overall in the ten 'bad years' (let's not dig too deep where they went) and dividends were paid most years... all of which would have been re invested in a public run company. The only benefit of having centrica private is market efficiencies are supposed to make it run better than under public ownership!

I despair if you can't sympathise with millions of people who are struggling to afford fuel and energy being angry with huge Centrica and Oil company profits at the same time. What's the point of the regulated UK market if millions of people rely on food banks and can't afford to heat their house this coming winter. Never mind the gini index, the numbers in deep poverty have increased 20% in the UK until the pandemic and that's before the recent energy and inflation shocks...... shamefully a high proportion of those are disabled.

[Offwidth]

I thought the counter view of getting ahead of events with a more full throated defence of why the population of workers (and voters) should not have to take *another* pay cut due to circumstances out of their control would be worth considering. If Labour agree with the Tories that people should take a pay cut this year then equally they should explain why? We know the Tories don't give a shit but people can join the dots and see that an alternative might be possible *if someone makes the case*.

How does that alternative actually work?

Well I think the leadership could be a lot louder about it and the left of the party could behave a lot better so the message gets through.

[seankenny]

I’m disappointed at the lack of Marxism on this thread. Marx recognised that individual capitalists had no choice but to cut costs and increase profits; if they didn’t, someone else would, and they’d go out of business. So no point on blaming them.

It’s the system, innit? Quite possible for the government to tax the profits, but executives are going to try and make those profits. Seems pointless to gripe about that.

Pete - I reckon you should use your new found man of leisure status to do an economics degree. I suspect you’d enjoy it a lot.

[Offwidth]

We don't need Marxism to raise extra tax from the wealthiest:

https://www.lse.ac.uk/research/research-for-the-world/economics/how-much-tax-do-the-rich-really-pay#:~:text=The%20top%20one%20per%20cent,by%20just%20over%20300%2C000%20individuals

https://www.lse.ac.uk/News/Latest-news-from-LSE/2020/L-December/Wealth-Commission-report

[seankenny]

My my, you’ve gone from blithely eliding income and wealth to proposing wealth taxes. What a difference a day makes!

Sarcasm aside, that all looks very sensible and well within a Labour government’s grasp.

[petejh]

Pete - I reckon you should use your new found man of leisure status to do an economics degree. I suspect you’d enjoy it a lot.

Ha, too many topics of interest and too little time!
I’ll certainly be retired (or at least not needing to work) in my forties thanks to resource investing, but the first step is completing on a house next month and mortgage companies don’t care for non-working people whatever their net worth. So man of leisure status will come later this year. Don’t know about economics - my time is going to be absorbed with installing a hefty amount of solar with battery storage, a heat pump and underfloor heating, with the goal to be off grid. Paid for with money made this year from investing in coal and oil/gas. I like the juxtaposition between where the profit was made and what it’s going to allow me to do.

[TobyD]

Looking like Truss is definitely going to win easily now: https://news.sky.com/story/tom-tugendhat-backs-liz-truss-in-tory-leadership-race-in-huge-blow-to-rishi-sunak-12661661

Lead by the economics of Patrick Minford,  noted Brexit supporter. He acknowledged before the vote that leaving the single market would destroy the UK car industry,  but thought that was a price worth paying.  Hmmm.

[Offwidth]

My my,

Now it's best to avoid deriding
some questionably defined eliding
even if right,
one just might,
look better if less patronising

The poorest will run out of money
avoidably and so not so funny
but Pete is OK
buy coal he will say
and join me in my milk and honey

The world just seems fated to burn
as crisis and war come by turn
yet while there's a chance
alongside our dance
we should plead with our leaders to learn

[petejh]

Non quality non climbing poems?

[Andy F]

Looking like Truss is definitely going to win easily now: https://news.sky.com/story/tom-tugendhat-backs-liz-truss-in-tory-leadership-race-in-huge-blow-to-rishi-sunak-12661661

Lead by the economics of Patrick Minford,  noted Brexit supporter. He acknowledged before the vote that leaving the single market would destroy the UK car industry,  but thought that was a price worth paying.  Hmmm.

Whoever wins the UK loses. The Tories and Brexshit will make sure of that.

[Nigel]

How does that alternative actually work? Energy inputs are more expensive. There are problems with supply chains. Brexit has had a negative effect. The U.K. has a productivity problem. All these things make us poorer in real terms. All are hard to solve. I’m afraid the only alternative I see to below inflation rate pay rises for most people is higher unemployment which is much more selective.

That’s the short term choice: a bit of pain for everyone, or a lot of pain for a smaller number of people.

Is this what you think the pitch to the voters should be?

But magically making people not poorer immediately strikes me as unlikely.

The proposal is not to use magic. It's to pay public sector workers in line with inflation. That would cost approximately 10bn over the current pay review proposal. That money is there, it is a choice not to do this (for all parties) - a choice that went the other way for pensioners who will get 10%, at a total cost of 20bn. Why is it "hard left" for workers to ask to get paid fairly, but fine for pensioners?

[seankenny]

The problem is that quite a few pensioners are pretty poor and on fixed incomes, whereas there are public sector staff on good wages with skills that give them outside options. You’re proposing a blanket solution that takes money from a retired dinner lady and gives it to a hospital consultant. I am exaggerating for effect, but not much - that is the effect of the kind of broad based pay scheme you propose. And it’s basically predicated on not really grasping that we are poorer, and just assuming government can do something about it. This refusal to engage with the idea of limits and trade-offs is *very* far left (and modern Conservative too, as it happens).

I prefer targeted help at the poorest via tax credits along with some kind of windfall tax on utilities. Because it’s possible to believe that the poorest are going to be very hard hit and absolutely need help, whilst also recognising that you can’t just magic away inconvenient facts like a society simply being able to do less.

[Wellsy]

As far as I can see it the economic problems in this country (in the sense of poverty) come in a few stripes;

1) geographical i.e deprived areas, where there are barely any jobs and local opportunities are poor to non existent.

2) Occupational i.e jobs we absolutely need people to do but want to pay them fuck all for, essentially an unliveable situation when combined with inflation

3) Educational i.e a lot of young people don't get access to good education and as an adult it's very hard to retrain into a lot of jobs, even desirable ones that we ostensibly want and have vacancies for, like nurses and teachers

4) Permanent Welfare i.e people who can't work because they are disabled, because they are full time carers etc.

There's no magic bullet to deal with all those and the deep systemic issues in our economy and broader society which cause them. There is no socially acceptable stake through the heart of a system where private school educated kids going into well paid jobs in cities essentially dominate our society, that is to say, who your parents are hugely determines your future. Dealing with 1 and 4, or 2 and 3, or whatever, are interlinked but require specific focuses and targeted work.

The Conservative Party will never fix any of those things because they struggle to admit that they really are a systemic problem, and even when they recognise them they refuse to accept that it is the government's job to do something about it, and even when they do their instincts are always catastrophically wrong headed.

We need to deeply restructure society so 1) all areas have opportunities 2) all jobs provide a good, liveable quality of life 3) state provided top quality  education and support for kids and adults is readily available 4) the welfare state fully provides for those who needs it

Most British people would agree with that they just don't want to pay for it.

[spidermonkey09]

The problem is that quite a few pensioners are pretty poor and on fixed incomes, whereas there are public sector staff on good wages with skills that give them outside options.

Surely the reverse of this is also true? Ie, there are also quite a few pensioners on very good incomes as well as the state pension, with significant assets, and a lot of public sector staff on bog standard wages, renting, where that job is all they;ve ever done.

I don't know the figures in terms of which group is greater or even where to find them though.

[Nigel]

Spidermonkey beat me to it - the millionaire pensioner in their mortgage free country pile and nice private pension also gets the 10% uplift in the state pension, whereas the NHS nurse with a young family who worked through the pandemic saving for a house deposit and watching house prices constantly running away from them while paying someone else's mortgage in rent gets that taken from them.

It's an easy game to play, it's also divisive. The proposal should be both rather than and / or in my opinion. If its genuinely not affordable (which I don't accept), and we must have a trade-off then how about 7% each pensioners / working people (cost neutral atm)?

[seankenny]

The problem is that quite a few pensioners are pretty poor and on fixed incomes, whereas there are public sector staff on good wages with skills that give them outside options.

Surely the reverse of this is also true? Ie, there are also quite a few pensioners on very good incomes as well as the state pension, with significant assets, and a lot of public sector staff on bog standard wages, renting, where that job is all they;ve ever done.

I don't know the figures in terms of which group is greater or even where to find them though.

Of course it goes both ways! That was so obvious - and the situation you outline was the subtext of Nige’s post - that this was just an example of why a blanket policy is silly. Fundamentally I believe you have to pay public sector roles so that they get filled, as that is the most vital thing. There may be some issues with crowding out which to my mind is more a marker of the weakness of the U.K. outside London and the SE, but may be worth thinking about. I’d much rather see problems of poverty wages dealt with by tax credits or similar as it’s just much more targeted. Conversely pensions are a bit one size fits all but there are other options at either the lower end (one off payments etc) or the higher end (better wealth taxation).

But at heart, the rise in the real cost of energy means we are all poorer. That is inescapable. The question is how that pain should be divided. Clearly it should not be borne by families at the edge of poverty. But then it *is* going to be borne by middle class families and inevitably some of those will be public sector workers such as teachers, doctors, etc, and the way the pain will be transmitted is higher interest rates and higher prices.

[TobyD]

https://www.theguardian.com/politics/2022/aug/03/spiralling-inflation-crops-left-in-the-field-and-travel-chaos-10-reasons-brexit-has-been-disastrous-for-britain?CMP=Share_AndroidApp_Other

The underlying factors that are making everyone who lives in the UK worse off and less happy since Brexit.
Hooray for the sovereignty though eh.