130 billion debt - Truss

[Stephthegreat]

Truss, misguided as she is, has announced a 130 billion bailout for the energy companies. Why saddle our dcs with this enormous debt because, let’s face it, it will be paid back down the line.

Truss completely ruled out a windfall tax.

What next? I fear for our country, we have just had one clown and now we have this no hoper.

Yes I agree people are terrified and I think support is good. I don’t think people will go mad with usage but at least a section will be able to use heat at all. Even a couple of hours a day can change the situation a lot.

Martin Lewis seemed pleased with it this morning

I do see a different feel re debt on here - I think it’s down to messaging too. If we’d led with actual risk and spend and downsides of pandemic response maybe people like Sunak wouldn’t be regretting it later.

I think overall it was £450bn. That I’m not sure but I am over this figure is down to how we were led to think about it differently

Borrowing is one thing, but when she's also cutting taxes how it's ever going to get paid back is beyond me. The pound is already plummeting, recession on the horizon, this country is going down the pan and no one in power seems to give a shit.

It is confusing how it is worded. Martin Lewis from MoneySavingExpert has been complaining about it since it was introduced.

So all that austerity was for nothing?

The Tories constantly change the goalposts of what's important to them. They made such a song and dance about cutting national debt and now are bigger spenders than labour ever were!

Huge hypocrites.

Covid spending was 167 billion - according to Parliament briefing paper on the subject, but then there was the shortfall in tax take, so the Govt borrowed 323 billion in total... approx figures.

Sterling has fallen to below CV period levels, says it all.

YABU. "Do nothing, that's wrong. Take action, that's wrong too."

The older I get, the less I care about the impact we have on future generations. It's always been the case that children and grandchildren have to pay the price of the actions of previous generations. Given than my generation have been fucked over so badly already, it seems only fair to give us a bit of a break and kick the problem down the line for others to solve.

There is no acceptable solution. Remember the austerity years, government really squeezed the poorest in an attempt to get borrowing under control. All that led to was public anger. People don't want to pay the price today, therefore someone will have to pay the price tomorrow.

Ideas like "tax energy profits" sound good on paper but it's like a vigilante lynch mob, it's satisfying in the moment buy has long term consequences and there are often innocent victims.

My solution would be to temporarily nationalise energy companies for a decade or two. There'd be no need to pay compensation to the current shareholders because they'd still own their shares, they could still buy or sell them, and once the energy market has been fixed they could be fully private again.

Well I'm older and I do care. I'm not selfish.

Also: "And you really think they'll be so willing to invest their profits into the UK rather than hoard them."

As if! When judging future behaviour, look to the past. And who can believe their sums, anyway? They are vague and there's always changes and caveats down the line.

I think that was the point on re-negotiating contracts with renewable companies, basically trying to reduce per kwh cost by fixed pricing over 15 years and re-starting fracking etc.

I assume this is a stop gap while they find a longer term solutions.

Given that they have already had these conversations and it’s the first few days of a Truss government I assume there are other ideas in the pipeline too (this may be a generous assessment, who knows).

It is not madness if Liz Truss does not expect to be Prime Minister in 18months time...

No, why would I be doing that

Essential utilities (electric, gas, water, Internet, a telephone service) should be run by the government and only charge cost prices, they shouldn't be run for profit.

Last time corporation tax was lowered it resulted in more revenue for chancellors coffers. Truss wants to attract more businesses to invest in UK to grow our economy. Slapping a windfall tax on large companies like Shell when they have already had one windfall tax only a few months ago would send the message not to invest in UK. We as a nation will pay down the debt over many years like we did when Brown bailed out banks during financial crash, or after war or furlough. Interest rates for borrowing for UK are still low in terms of historical rates. Truss is trying, by intervening in the energy crisis, to lower inflation and keep prices down. I am glad a cap will be put into place and that it is for everyone because when everyone in the country is really feeling the pinch but only those on benefits get help it breeds resentment.

On BBC news last night, someone was saying the windfall tax would raise 5 billion pounds, which works out at less than 4p for each pound you saying is going to be spent. So it's really not a solution.
Oh, and there already is a windfall tax. (I was checking details of what that expert said, and my search brought up the fact that Rishi Sunak had created a tax in May this year.)

Indeed. Rishi Sunak's £5 billion pound windfall tax here;

www.theguardian.com/politics/2022/may/26/sunak-announces-windfall-tax-energy-firms

Labour's six month energy plan only talks about raising £8bn from oil and gas producers. Jonathan Ashworth wouldn't answer the question yesterday when asked if Labour would also need to borrow money (LBC). Ed Davey dodged a similar question the day before.

So all that austerity was for nothing?

The EU seem to agree - austerity was an EU policy;

Austerity was a mistake, says EU economy commissioner...

European Commission chief Ursula von der Leyen said the EU had "learned the lessons from the past"

www.irishtimes.com/business/economy/austerity-was-a-mistake-says-eu-economy-commissioner-1.4678260

Not a big fan of Liz Truss here, but the 130 billion is down to Putin far more than any U.K. politician.

Our children if they remain resident will 'inherit' a complex economy made up of a National Debt, a range of physical assets for which they won't have paid, a workforce of employees with a range of skills and an ecosystem of firms. All of that would be impacted in arguably unpredictable ways by this 'subsidy by borrowing' option and by the counter-factuals of doing nothing or windfall taxes.

If some PPs understand the consequences of one choice compared with the other options enough to be certain that this decision is much worse then I suggest they might want a career in investment or improve their self-awareness.

Put civil servants in charge of critical infrastructure?

God no.

Austerity was for nothing? Far from it, mission accomplished, only that mission was not the purported one. it was a series of conscious decisions to prioritise directing a greater share of the economy to the richest 1% who gained c£2.5tn while by some measures, workers lost c25% of earnings in real terms. It succeeded in its aims. By some measures, the UK remains a smaller, less rich economy with a relatively low-skilled workforce working relatively long hours which make exhortations about lazy workers demonstrate some politicians either lack of understanding or deliberate playing to the prejudices of a particular electorate. What were the UK government's decisions about adult education and skills during austerity? How does the UK's per capita GDP compare with RoI? What are the trends for the two nations?

Borrow and Spend. That's the Tory part motto now.
I believe most voters prefer this to Tax and Spend, so voters are the ones to blame.

As an aside, I hope some jouro works out the net gains/losses to "average" persons on example wages, under Truss plans. Give the hypothetical wage earners each £150 combined household energy costs (pre October 2022) to standardise that. Just focus on the tax cut effects. Who benefits most in a group of people making
£20k/annum
£40k/annum
£80k/annum

I bet it's not the person on £20k who benefits most.

ps: I'm on about £40k & think it's outragious I'm benefiting so much from the Truss plans.

I read that nationalising energy companies would cost £55 billion, so I'd be (genuinely) interested to know what the downside of that is in light of this short-term fix that'll cost almost three times as much.

We'll be paying this back forever. It's a disaster. There were other ways to do this. Windfall tax etc.

With regards to fracking - brilliant, we'll poison the ground and then sell the oil and gas to other countries and it'll make no difference to our energy bills at all. More profit to the fossil fuel companies.

Well for one thing nationalizing them wouldn’t reduce peoples energy bills by more than a few pounds a year, so it makes no sense to compare that plan with one that makes a real difference.

My understanding is that the per customer revenue from UK energy retailers is c£60 per annum so nationalising these won't have much effect given the majority of UK energy consumption is from energy purchased in international commodity markets. Domestic production of renewables has a range of subsidies and guarantees required to support the historical investment so nationalising these might not save much. My understanding is that more of France's energy production is from domestic nuclear so nationalising by buying the remaining 16% of EdFe that the French state doesn't own might make sense. Where the UK market wholesale price seems to be set by marginal pricing might bear some scrutiny though where is e riches those providers with lower generation costs.

For PPs certain that windfall taxes would sort this, what % of UK energy uses domestic production/windfall-taxable production and what involves buying on the international commodity markets?

I have never voted Tory and I agree the costs should fall on the vast windfall profits BUT all this cack about credits cards and debts left to children is frankly arse. Not how a nation's finances work, although it's a hackneyed soundbite started by Thatcher.

They are planning that - if they fail at the next election they can blame the debt and economic hardship on the new government