Why is no one asking "Who sets the prices?"

MattMattMattUK

Chrysalis said:

MattMattMattUK said:

Chrysalis said:

The media seems intentionally dumbed down in this country.

Think of all the following questions that could be asked.

Q - If wage increases cause a inflation spiral then why do France and Germany have much higher wage inflation than us but lower cost inflation.  (proves that wage inflation spiral is a myth).

It does not prove that wage inflation is a myth, it has actually been demonstrated multiple times in real world situations that it happens. Both have increasing wages, both still have wages increasing less than inflation. The issue during this current economic situation is that for most countries around the world the inflationary pressure is almost entirely external, it is due to increases in the costs of energy and food and the knock on impact that has on product and service costs. In the UK around 6% of our 12% inflation is due to Brexit, that is why our inflation is higher than the inflation in the EU. Also we have house price inflation, which will be further fuelled by wage increases, where as most EU countries are seeing flat or even declining housing markets, so large levels of wage increases in the UK would be inflationary due to the impact on housing. It does not mean wages cannot increase, but it does mean that those increases have a wider economic impact.

Chrysalis said:

Q - Why are we only storing 1% of gas as reserves vs 33% in Germany and over 100% in Austria.

Historically since the start of North Sea gas we did not for many decades need gas storage to cover more than short term blips as production far exceeded supply and we were exporting gas. We also only had one large scale facility (Rough) which was shut down due to being commercially unviable in the era of low prices and narrow margins.

Chrysalis said:

Q - Why do we allow energy to be traded on the open market

It is a global market, with exploration and extraction run by private companies. The UK government, chosen by the electorate, decided that they did not want to be taxed to allow the state to invest in energy production. We could have been like Norway and kept exploration, extraction and production in private ownership, or we could have been like France and built 70+ nuclear power plants, but we did not want to pay for that.

Chrysalis said:

Q - Is there any plans to regulate the energy market (not just the suppliers who are selling us energy that have already paid a lot for on the market)

No, we do not have the power to regulate a global marketplace. If the government wanted to it could build a lot of capacity itself, but the population are not willing to pay the taxes required to do that, so they will not.

Chrysalis said:

Q - What is ofgem's mandate.

On their website.

Chrysalis said:

Q - Why is ofgem allowing energy companies to recuperate their losses faster and ignoring human rights impact when setting their cap.

They are not allowing them to recoup their losses, they are allowing them to sell at a very narrow profit margin, around 2.2%. Making a 2.2% profit is not a human rights issue.

Chrysalis said:

Q - Are credit balances currently secured.

They are guaranteed under the SoLR system, they are not in separate accounts. 

Chrysalis said:

Q - What is the breakdown of the circa 4.5 billion annual revenue of standing charges expenditure, (where does the money go).

Available on the Ofgem website. 

Chrysalis said:

Q - Should parent companies of energy suppliers be taken into account when considering their allowed profit. Centrica vs British Gas for example.

No.

Chrysalis said:

Q - What plans are been actioned for long term energy supply owned by the state given its clear privatisation has failed.

I would not say that privatisation has failed, but elements of our current system are certainly not working in the way many want them to. As to what plans there are, none.

Chrysalis said:

Some tv news presenters are clearly angry and asking some ok questions, but the media is still very light touch and insular on the type of questions they ask in particular there seems to be a lack of comparing us to other countries which could stumble ministers.

Mostly the media are asking the wrong questions and leading with the wrong headlines because the public do not want to learn and be informed. Anger and tantrum sells more newspapers, generates more clicks and gets more viewers. Most other countries are in a similar situation. France is used as an example where bills have "only gone up 4%", which is true for the cost at the plug, but ignores the tens of billions of Euros the French government is having to inject into EDF to keep it going, so the French are paying for their energy via taxation as well as by bills, but the public are thinking if the French only have a 4% rise then why are we having prices more than double, without knowing the full information or even having the ability to understand it.

I wasnt asking the community for answers but saying these questions need to be asked, but in terms of your answers.  They would be amusing if the situation wasnt so serious.  Think about it, wages are only a small part of a business expense, if inflation rises first (which it has done in this case), and wages rise to match so workers merely are not getting poorer, its not going to make the inflation never ending as is currently claimed, you even said yourself the inflationary causes are external.  The data for France, Germany and other western European economies are cold hard figures, they have more than double wage inflation, yet lower cost inflation.  These are cold hard numbers. Facts are facts.

I said that the external factors are important, but wages could still cause an inflationary spiral. For almost all businesses wages are their biggest costs, for more than half of businesses wages exceed 75% of their total costs. The data for France and Germany is cold hard facts, but it is not saying what you think it is, it is more complex than that. Germany for example is still improving efficiency even now, increasing wages is fine tied with increased efficiency. The problem in the UK is that we have one of the least efficient workforces in Europe, together with relatively high wages and the people currently demanding increases well above inflation are some of the least productive to start with.

Chrysalis said:

On your answers it effectively is in short we tried to do things on the cheap because the right wing press machine convinced uneducated voters the tax cuts (which the rich mostly benefit from) was the way to go.  

I don't think you can really blame "the right wing press machine", the problem is many people in UK have a short term outlook, especially compared to our continental cousins, they would rather sugar today than jam tomorrow. People consistently vote in their own short term interest, most Conservative voters are high earners and/or wealthy, the Conservative help them with lower taxes and they are less impacted by cutbacks in services. Labour voters are mostly low earners or the unemployed, they vote for higher taxes on other people and more benefits and services for themselves. Both groups vote to pay less and/or get more themselves and for other people to pay more and/or get less, selfish short-termism. 

Chrysalis said:
As an example of how easily people are misled, we had a population voting for Brexit which is akin to Turkeys voting for Christmas, and we have Truss telling people the following tax cuts will help with the cost of living.

People have to want to be misled, they selectively choose information that suits their worldview and refuse to seek out counter narratives. Tax cuts will help some people with the cost of living, but it will not help the majority and those it does help it will not help very much. Unfortunately stupid cannot be fixed.

Chrysalis said:

NI Rise been cancelled (£60 annual saving for min wage, less than £200 saving for median wage, £1800 saving on PM salary, £0 saving for those who dont pay tax, aka the poorest).

It has not been cancelled yet, Truss still needs to be crowned. If you look at polling the plebs think that it is good for them, again, you cannot fix stupid.

Chrysalis said:

Cancellation of Corp tax rise, no help at all on cost of living, I mean !!!!!!.

It depends upon one's circumstances, but it is not true that it will not help, it will help many small business owners, there are 5.5 million small businesses in the UK, some owned by one person, others owned by a family, or a group of like minded people. So the cancellation of the CT rise will help millions of people/families with the cost of living rises, they might not be the people that you want help, but it will help millions.

Chrysalis said:

Inheritance tax reduction. !!!!!!

So far all Truss has said is she will review IHT, speculation ranges from doing nothing to total abolition. Abolishing IHT is popular across all groups ABC1C2DE across both Conservative and Labour voters, with 70-90% of people supporting it being abolished entirely depending on how the question is phrased. It raises about £6.5-6.7 billion per year so not a huge revenue source, for the small loss in revenue it is probably a good political capital to abolish it.

Chrysalis said:

Cancellation of green levies, £150 saving, however not confirmed if energy suppliers will be forced to pass on the saving or its just assumed/hoped they will.

This is more short-termism, so it will be popular with many, even if makes things worse in the medium to long term. The amount is part of the regulatory framework, it cannot be kept by the providers for those on SVT, in theory for those on a fix it could as they signed up to a fixed price rather than a floating target, but it is likely that the reduction would be enforced by Ofgem.

Chrysalis said:

Telling people we not doing things because we voted/asked for it is an interesting reply, as the population for the most part does what its told to do via the media (my mother is constantly telling me XX is that, YY is this because the daily mail told her so).  Likewise when you say the media is dumbed down because the population dont want to be educated, its the other way round.  Do you have a poll which says people asked to have dumbed down news?

The information is available for those who wish to educate themselves, that shows that those people who refuse to assimilate it are doing so wilfully. Your mother could choose to read multiple news sources presenting different perspectives, she could read the wider information available, but choose not to. With dumbed down news you only have to look at consumption, the reason news has dumbed down is because people do not watch/read/engage with more complicated information. Tabloid press readership (or clickship) outstrips serious news (The Times, FT etc.) by an order of magnitude, more people visit the Daily Mail website in a day than visit The Times, The Telegraph, The Guardian and The FT combined over a week. Most people seek out confirmation of their views, not views counter to their own, it is why the social media algorithms work so well, why Donald Trump pointed out he could shoot people in the street and his supporters would still vote for him, why Brexit supporters still insist it was a good choice despite the obvious harm is is causing etc. 

davidgmmafan

Section62 said:

jj_43 said:

However, the customer won’t see any benefit from this open and liberal approach.

The customers who took advantage of switching to good deals - including zero standing charge ones, and tarrifs designed for EV owners (for example) - have benefited quite well from the open and liberal approach.

Not to mention the individuals and organisations who did quite nicely from encouraging people to ditch and switch.

Hmm and yet now we find ourselves in a situation where we've got the negatives of state and private ownership but none of the advantages...

jj_43

Chrysalis said:

jj_43 said:

Q - Are credit balances currently secured.

Yes, Ofgem has made arrangements for this. When a supplier fails, Ofgem will prefer to appoint a new supplier that will honour the credit balances, at no cost to other customers, it's the ideal result. Given they are being handed a large bunch of customers for free it may be a small price for the new supplier to pay to gain customers.

In other cases the new suppliers can recover the cost of securing credit balances from an industry levy, which ultimately is added onto everyones bill.

So this stuff is in place right now? No more recovering credit balance losses from others?  

Perhaps you can clarify the last line if it means recovering the balances via the levy.  If it does mean that then Ofgem have not yet fixed this problem.

I perhaps should have added verbosity to my question, it means are the balances secured so they will never ever need to be recovered via levies.

No, ultimately credit balances are secured by the levy. Perhaps some form of insurance could be setup to secure them (customers will pay) or require energy suppliers to place the funds administered by trustees (customer will pay), so the question would be what’s the cheapest arrangement? With the current at least there is the option that in most situations the balances will be protected via energy supply bidding for the new customers.

jj_43

But anyways I expect the industry is facing a full  bailout/nationalisation. The last few years winters have been very mild, if we have a cold winter energy suppliers are going to pay 10 times for the commodity to meet increased demand. Very very big pockets will be needed.