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Wednesday, 10 May 2017

Mrs May's Caps

Theresa May has been a lifelong fashionista who asked [on Desert Island Disks] for a lifetime subscription to Vogue: which makes it odd that she has chosen to wear for much of this election campaign tweedy jackets that hang oddly around her distinctive anatomy. She looks to me like a chargehand beater on some minor grouse moor; in which case a cloth cap would complete her ensemble perfectly.

Her election campaign has featured two very un-Tory caps: one on energy prices to households and the other on immigration to the post-Brexit UK.

Critics and commentators from the whole political spectrum have pointed out - as nauseam - that a cap on energy bills was one of the policies that vanished with the 'Ed stone' when Labour lost the last General Election. Mrs May has decided that it is an election winner. As I have mentioned in previous blogs, any change to the model of privatisation brings into question the rationality of the whole concept. To cap a major segment of the pricing structure is a fundamental move away from the Economists' model of privatisation: in the direction of arbitrary government interference that smacks more of a dictatorship than of a free market; or even a balanced mixed economy such as the UK enjoyed in the period 1950-70.

Electricity bills, in particular, are increased by the huge subsidies and tax reliefs that are given to windmills, solar panels and other forms of 'renewable' energy: at the expense of the customers. It is a result of government policy that these charges are loaded on the consumers, threatening household budgets and the future of energy-intensive industries, notably iron and steel. In these circumstances, it is simply silly to make another intervention and hand over the implementation of the idea to an 'economic regulator' that is meant to apply the nonsensical models that were fashionable in the 'eighties. No doubt Mrs May will win the election, and will have her way on electricity bills: and there will be plenty of time to rue the decision before the next General Election. Eventually, the whole idea of economic regulation of utilities will have to be stripped back to first principles and replaced.

Mrs May's other cap - on net immigration to the UK - has attracted a lot of comment on the assumption that there is almost certainly a deep psychological need for her to persist in this policy, which has featured in the last two Tory manifestos and fallen to her, as Home Secretary, to 'fail' to implement. I have been told by British-Asian friends that some of their communities voted for Brexit on the assumption that if European immigration was restricted there would be more room for greater Asian migration into the UK. The statistics of the last several years show that net migration from outside the European Economic Area into the UK exceeds EU citizens' immigration to the UK very significantly. So even an extremely 'hard' Brexit will not reduce immigration to anywhere near the level [less than 100,000 net per year] that Mrs May is proposing as the maximum. Her refusal to exclude international students from the tally is simply silly: damaging to university finances and to the balance of payments generally, and significantly weakening the talent pool within the country [if she can pull it off].

Industry and commerce are struggling to explain to this purblind person that the country unconditionally needs to call upon a wider pool of skills and talents than the UK itself is generating. As long as the austerity regime continues - especially if resources are being misdirected to harebrained schemes such as grammar schools - the British educational system will not produce the skills that are needed. Fake apprenticeships are an expensive travesty: they do not produce skilled workers, but young people who are even more sure that the system has cheated them. The immigration cap, if Mrs May actually tries to implement it, will poison the whole Brexit negotiation and cause deep anger among immigrant communities: as well as real detriment to the economy [not least, the creative industries]. There is a real peril in this crazy concept.

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