Tuesday, 16 October 2018

Do We Need to Tax Wealth Properly in the UK?

The Institute for Public Policy Research (IPPR) Commission on Economic Justice have produced an evaluation of the taxation of wealth in the UK. The report, A Wealth of Difference’ concludes that wealth inequality is damaging the UK’s society and economy, whilst the current tax system is failing to tackle and in some cases is even exacerbating inequality. The authors propose a number of reforms to the system including replacing council tax with an annual property tax and replacing business rates with a land value tax.

Wealth Inequality in the UK

Household net wealth in Great Britain is valued at £12.8 trillion, of which 44 per cent is owned by the wealthiest 10 per cent and only 9 per cent is owned by the bottom 50 per cent of people. Wealth is twice as unevenly distributed as income in the UK, with a Gini coefficient of 0.62 for wealth compared to 0.32 for income.

Wealth refers to assets including property, financial wealth, pension wealth and physical wealth such as vehicles. Wealth inequality in the UK fell after the World Wars but has been increasing since the 1980s due to neo-liberal policies. This has been driven by increasing returns to capital compared to labour which means those who earn income from assets have seen their incomes grow more than those who work for a wage. Underlying causes include house price inflation and falling homeownership, financial asset price inflation, automation, low pay and weak labour bargaining power.

Increases in inequality have clear social implications. Beyond this, it is also limiting for economic growth. Those with greater incomes have a lower marginal propensity to consume, meaning they are more likely to hoard their wealth rather than spend it in the economy. The current system of taxation incentivises ‘rent seeking’ behaviour which means that people invest in existing assets such as housing which pushes up the price of that asset without generating any new economic output or activity.

The Current Tax System

One of the most powerful tools to combat wealth inequality is taxation to fund progressive spending. Currently, income from labour is taxed more heavily than income from wealth. Wealth in the UK is primarily taxed through capital gains tax (CGT), inheritance tax (IHT), dividend income taxation and stamp duties which bring in only 4 per cent of total tax revenues. In contrast, income and consumption taxes bring in 60 per cent of tax revenue.

The report identifies several key problems with the current system of wealth taxation: there are significant opportunities for avoidance, the system fails to raise large amounts of revenue, it creates economic distortions (for example, exemptions to CGT for first homes, encourages investment in property over other assets, differences in taxation of dividends vs income encourages senior pay to be dividend based).

The under-taxing of income from wealth compared to income from labour is regressive since wealthier individuals are likely to have greater income from assets than labour income and finally it will be fiscally unsustainable in the long run to raise sufficient revenue if income from labour continues to decline relative to income from capital.

Report Recommendations:

Tax all income from wealth under the income tax schedule

Treating income from capital as the same as income from labour from a taxation perspective would make the system considerably more progressive. In addition, it would increase incentives for labour market participation by the wealthy, raise more revenue and reduce opportunities for avoidance by simplifying the system (removing exemptions). Finally, shifting the balance of taxation towards capital rather than labour means the government will continue to be able to raise revenues in the face of increasing automation and technological change.

Abolish inheritance tax and introduce a lifetime donee-based gift tax

Wealth transfers give an unearned advantage to the recipient and work against social mobility, creating a strong social and economic justification for taxation. Inheritance tax currently has many exemptions and opportunities for avoidance that could be improved upon by a gift tax.

The report proposes taxing any gifts above a lifetime allowance of £125,000 under income tax. However without improvements to HMRC’s digital infrastructure it would have to rely on self-reporting and would require valuations of non-monetary gifts. The resolution foundation estimated such a tax could raise £15bn in 2020/21 (£9.2bn more than the current IHT).

Abolish non-domiciled status and reform the transparency of trusts

Improvements to transparency could reduce opportunities for avoidance as well as reducing the complexity of administering the system.

Introduce an annual property tax to replace council tax and eventually stamp duty.

The report recommends replacing council tax entirely with a new property tax. This wold be proportional to the present day value of homes and is different to a land value tax since it also taxes the value of the property itself. This would be levied on owners rather than occupiers (however owners are likely to pass this on in the form of higher rents).

A deferral mechanism would be needed to protect those who are asset-rich but cash-poor. Since the tax is linked to property values it would help to recapture some of the value generated by public investments in infrastructure such as new train stations. A charge of 0.5 per cent of property values is estimated to generate at least as much revenue as the current system. This could also replace stamp duty land tax in the future.  It would be possible to introduce progressive rates, exempting properties of low value and allowing for regional variation.

Introduce a land value tax to replace business rates

Land value tax has always been popular among economists. It taxes the value of the land (not the property on it) based on its most valuable use under existing planning permissions. This would penalise those who own land and do not develop it, incentivising more efficient use of land, without penalising those who make improvements to their properties. This would require considerable effort to value land regularly and establish a register of land ownership however it has been achieved in some European countries and elsewhere across the world.

Such a tax would support productive investment (unlike business rates), capture unearned rents from ownership of land and reduce incentives for speculation on land. It may also make parts of the country with less valuable land more attractive to businesses. An exemption to the first £20,000 per hectare would exclude most agricultural land. A rate of 4 per cent would generate the same value as the current business rates system.

These are all good ideas. We need to tax the wealth held in the UK more fairly if we want decent public services for all.

Sunday, 14 October 2018

Stop Misdiagnosing Climate Change – the Root Cause is Capitalism

Written by Diana Stuart and Ryan Gunderson and first published at Common Dreams

The recent IPCC report has received widespread attention. The report states that rapid and bold actions are necessary to avoid the catastrophic impacts of climate change and that the goals of the Paris Accord will be insufficient.

This has resulted in an outpouring of opinion pieces calling for individuals to take actions in their daily lives to reduce greenhouse gas (GHG) emissions and to pressure elected officials to take significant steps to support renewable energy. This sense of urgency is critically needed, yet most of these calls for action are misguided due to a widespread misdiagnosis of the climate change problem.

To address a problem, it is most effective to identify the root cause. One might argue that the root cause of climate change is fossil fuel combustion. However, this overlooks how our current economic system not only continues to protect and sustain the fossil fuel industry but also drives the continuous increases in production and consumption causing environmental degradation at large. What is this system? Growth-dependent capitalism. Here we focus on the impacts of that growth.

The prioritisation of economic growth is what makes highly effective actions, such as buying-out or nationalizing fossil fuels and keeping them in the ground, infeasible. A recently released UN document, related to the 2019 Global Sustainable Development Report, suggests that the root cause of climate change is the economic system, namely one that prioritises profits at the expense of ecological and social well-being.

Evidence is mounting that demonstrates how prioritising a growing economy is the true driver of climate change. Data shows a positive relationship between economic growth and GHG emissions. This makes sense since GDP growth correlates with material production, including carbon: GDP growth by 1% equals a 0.6% growth in material use a 0.5–0.7% increase in carbon emissions.

Even scientists working on carbon budgets have come forward stating that reducing GHG emissions is incompatible with economic growth. While proponents of “green growth” support the idea of increasing GDP while reducing GHG emissions (known as absolute decoupling), this has yet to be realized. In most cases, decoupling in developed nations has been a result of increased carbon-intensive production in developing nations.

Greening growth through alternative energy, efficient technology, and carbon markets has had limited and paradoxical impacts. Efficiency gains are in many cases partially or completely offset by increased consumption. Because we are not implementing policies to decrease fossil fuel use, a unit of energy produced by alternative energy does not replace a unit of energy produced by fossil fuels and is correlated with increased total energy use. In a system prioritising economic growth the effectiveness of green alternatives will continue to be constrained by increasing levels of production and consumption.

In addition, market mechanisms that prioritise profit have not slowed climate change. The EU Emissions Trading System, the oldest and largest carbon market, has not dramatically reduced emissions. In 2017, the EU policy director stated that “the EU carbon market will continue to fail at its task to spur green investments and phase out coal.” Due to these realities, we need to move beyond an economy that prioritises growth.

But isn’t economic growth critical for a thriving society and human well-being? Actually, economic growth has only been a social priority for a relatively short time. As stated by ecological economist Herman Daly, it is largely believed that “without economic growth all progress is at an end.” He counters this belief by asserting, “[o]n the contrary, without growth . . . true progress finally will have a chance.” Stopping economic growth doesn’t mean we cannot meet our needs. We will still have enough. We will simply put an end to the production and consumption of more and more unnecessary things that harm us and the environment for the sake of a 3% annual increase in GDP.

In fact, studies show that economic growth that goes beyond satisfying basic needs does not increase happiness. What it does is push us beyond ecological limits in dangerous ways. By putting growth in its place, we can prioritise people, climate, and prosperity before profit. More and more people are starting to question whether a capitalist system that prioritises profit and growth above all is really a good thing. 

These ideas are spurring on an increasing number of academic and activist projects that offer alternatives. For example, the degrowth movement supports planned economic contraction and dematerialization in developed nations. Degrowth proponents explain why people would be happier in this new economic system. While there would be reduced total material production and consumption, there would be growth in social services, well-being, sharing, community agriculture, energy and worker cooperatives, not to mention a stronger sense of community.

This does not necessitate living without modern conveniences, just not more and more of them.  A range of degrowth policies have been proposed, including work time reduction, which has been shown to reduce material production, energy use, and GHG emissions while increasing health and well-being. Policies to reduce working hours would represent a critical step in restructuring our economy to address climate change.

Perhaps this all seems radical. That would be appropriate, as the word “radical” from the Latin radicalis means relating to the root. To accurately diagnose the climate change problem, we have to get at the root – our economic system. As the authors of the UN document explains, we need to “focus on life-improving and emissions-reducing goals rather than abstract economic goals.” They call for a new system where “economic activity will gain meaning not by achieving economic growth but by rebuilding infrastructure and practices toward a post-fossil fuel world with a radically smaller burden on natural ecosystems.”

They conclude by making clear that “states are the only actors that have the legitimacy and capacity to fund and organize large-scale transitions.” While communities move forward with important projects that put ecosystems and people first, we also need to push our governments to recognize economic growth as the root cause of climate change and implement policies to re-create our economy.

Diana Stuart is an Associate Professor in the Sustainable Communities Program and in the School of Earth and Sustainability at Northern Arizona University. Her work focuses on climate change mitigation and adaptation, agriculture, conservation, animals studies, political economy, and social theory.

Ryan Gunderson is an Assistant Professor of Sociology and Social Justice Studies in the Department of Sociology and Gerontology and Affiliate of the Institute for the Environment and Sustainability at Miami University. His research interests include environmental sociology, the sociology of technology, social theory, political economy, and animal studies.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License

Friday, 12 October 2018

Meet the Real UK Scroungers – the Royals

Princess Eugenie today married Jack Brooksbank, a “tequila ambassador,” whatever that may be, in Windsor. The lavish wedding was replete with carriage drawn by four white horses, and is estimated to have cost the public purse around £2 million, in security, policing and road closure costs, although it has probably cost UK tax payers a great deal more. Princess Eugenie is the daughter of the Andrew and Sarah, the Duke and Duchess of York, and ninth in line to the throne.

Eugenie, who is employed as a director at the London art gallery Hauser & Wirth, does not receive any money from the sovereign grant, which replaced the civil list, but is supported from her father’s private income. But who pays what for Royal marriages is a somewhat murky area.

Campaign group Republic, whose petition for no taxpayers money to be used has attracted almost £50,000 signatures, says that the cost to tax payers could well be considerably higher than the £2 million official ‘estimate.’ The wedding appears to be of similar scale as Harry and Meghan’s (Duke and Duchess of Cambridge) wedding earlier this year, a wedding that they say cost taxpayers over £35 million, and was officially estimated at £2 million. A spokesperson for the group added:

“Taxpayers deserve to know exactly how much money is being spent and which of our public services are being diverted to make the wedding possible. The government should make transparency the priority and publish a report of all costs to taxpayers.”

Eugenie doesn’t receive any money directly from the ‘Sovereign Grant’ but her father does, although I’ve been unable to find out how much exactly he does get. It is likely that he also gets money from his mother too, the Queen. Funding for the Sovereign Grant also comes from a percentage of the profits of the Crown Estate revenue (initially set at 15%) and will be reviewed every five years. Last year these profits totalled £304 million. This property though was in some way plundered in the past from whoever owned the buildings and land.

The Queen also generates income from her land and property portfolio. These assets are known as the Duchy of Lancaster and are held in trust for the sovereign. The Duchy is managed and run for the Queen and she receives all the net profits – about £12.5 million a year at the last count. This income is referred to as the Privy Purse. Again this land was plundered at some stage in history by the Royals ancestors.

The Duchy of Lancaster is one of two royal duchies, the other being the Duchy of Cornwall which provides income to the Prince of Wales. The Prince of Wales is entitled to the annual net revenue surplus of the Duchy, which was worth £20.8 million last year. Prince Charles also receives money from the European Union’s Common Agricultural Policy.

All of which leads to staggeringly casual wasteful spending on the part of the Royals, Prince Andrew, for example, squandered £14,692 on a round trip to see the golf at Muirfield. His younger brother, Prince Edward, meanwhile, took a £46,198 charter flight to Sofia, Bucharest and Ljubljana.

Although, Republic’s petition has attracted almost 50,000 signatures, which is pretty modest by on-line petition proportions, I noticed from television footage and reports, that there was only a sparse crowd that came out to watch proceedings, despite free tickets being offered to the public.

Personally, I don’t know anyone who is remotely interested in this wedding, of what is a fairly minor member of the Royal family. I’d bet most people didn’t even know who Eugenie was, until this wedding story broke. I do sense a growing ambivalence from the British public to the monarchy generally these days, if not outright hostility.

Some have tried to compare the policing costs of this wedding to that of public demonstrations, but organisers do provide their own stewarding and protest is a fundamental part of our democracy. The Monarchy and assorted hangers on are merely a reminder of our undemocratic constitution and practices.

It doesn’t seem to me to be right, when the population at large are being asked to tighten their belts further after eight years of austerity, with benefits cut for the poorest in the country, leading to a rising number of suicides, that such largesse with public funds should be permitted, when it comes to royal weddings.  

Thursday, 11 October 2018

National Climate Crisis Demonstration - No to Fracking – Saturday 20 October

Written by Allan Todd

In my most recent blog about developments at the fracking protest at Preston New Road (PNR) in Lancashire, I’d suggested it was important to start disrupting the days of the various facilitators of fracking - and that, with the first horizontal frack in the UK about to take place, a national demo at PNR was an absolute priority.

A week that just kept on giving!

Well, the week or so that followed that blog post turned out to be a time that just ‘kept on giving’!!

Just to list those ‘gifts’ briefly:

Monday 1 October - a 9-person (Yes- 9!!) lock-on that began on that week’s Green Monday, & lasted until Wednesday 3 October!

The start of the 9-person lock-on

On the same day, the 100 Women & the Lancashire Nanas paid a visit to the Tory Conference in Birmingham.

The 100 Women outside the Tory Party Conference

Thursday 4 October - yet another truck surf at PNR!

Truck surfing at PNR!  

Friday 5 October - just hours after Cuadrilla had released a statement that they’d do the first frack on Monday 8 October, two local anti-fracking campaigners - Helen Chuntso & Bob Dennett - WON an interim injunction AGAINST Cuadrilla, which stopped them from fracking until a proper inquiry into the environmental & emergency safeguards that Lancashire County Council have (or haven't!) got in place!

Saturday 6 October - That Saturday saw over 300 people march, in solidarity with the FrackFreeThree, from Preston Railway Station to Preston Prison. The noise from drums & whistles easily penetrated the walls of the prison, & a text from one of the 3 currently imprisoned there confirmed they had heard the protesters.

Demo in Preston for the FackFreeThree

Monday 8 October - Frack Free London decided to pay a visit to the Department of Business, Energy & Industrial Strategy in London, where they erected - under the new ‘permitted development’ rules the Tories are planning to push through - a 4m-high fracking rig!!

‘Permitted development’ in London!

A Red & Green Alliance?

The Green Monday on 8 October saw what, hopefully, may be the first real ‘shoots’ of a Red-Green Alliance - not just against fracking, but also to do all that can be done to get rid of this Tory government: which, surely, has to include an effective but mutual Red-Green electoral pact?

The first speaker on Monday was Clara Paillard of Merseyside PCS trade union - and one of the founder-members of Red Green Labour: an ecosocialist group which aims to make the Labour Party ‘greener’.

 Clara Paillard, of the PCS union, speaking on Mon. 8 October

Clara’s very passionate speech:

was followed, later in the day, by a visit from Rebecca Long-Bailey, Labour’s Shadow Minister for Business, Energy & Industrial Strategy. After she had spoken, several people present asked her to make a real effort to get Jeremy Corbyn to come up to PNR - & so honour his two promises to come to show his support.

 A national CLIMATE CRISIS demonstration

In a week when the United Nations IPCC warned that we must reduce carbon emissions sharply over the next twelve years if we are avoid climate disaster, we are bringing it all together with a national demo on Saturday 20 October at Preston New Road, Lancashire.

Given that the recent IPPC Report has said that the world needs to urgently abandon all fossil fuel use, & that Cuadrilla will soon carry out its first frack, Frack Free Lancashire have called for a national demonstration to show that we say ‘No!!’ to fracking - not just in Lancashire, but anywhere in England. 

The day will begin at Maple Farm Nursery [on the A583, PR4 3PE] from 11.00am onwards. There will be speakers, music and food. Friends of the Earth are backing this demo in a big way - including giving some help towards transport costs for those groups needing to book coaches and minibuses. You can find out more about that via this link:

More details - & updates - can be found on this Facebook events page:

Planet Earth needs YOU!!

For all these reasons - and more - we need YOU to make a special effort to come and join us at PNR on Sat. 20 October. Bring banners & placards - and LOADS of friends! In view of the IPCC Report, this demo must surely ‘trump’ any other event that weekend.

Allan Todd is a member of Allerdale & Copeland Green Party, an anti-fracking activist and a Green Left supporter

Tuesday, 9 October 2018

May’s Charm Offensive to Labour MPs Smacks of Desperation

Theresa May’s piece in The Observer on Sunday, was ostensively aimed at Labour voters, with talk of antisemitism, threats to national security and the deselection threat to ‘moderate’ MPs, as evidence of Labour being unfit to govern. This narrative has been running for some time in the Tory supporting press, a smear campaign no less, of what May refers to as the ‘Jeremy Corbyn party’. But more immediately, she needs to win over ‘moderate’ Labour MPs to get her Brexit deal though Parliament, rather than voters.

In the Tory party in Parliament the numbers just don’t stack up for May’s Chequers Brexit plan, so she is really appealing to Labour MPs in thinly veiled code with The Observer piece. There is said to be up to 80 Tory MPs who are ready to vote against the Chequers plan, although some estimates put it as low as 20 in the end game. I suspect there are more than twenty. These MPs are from the hard Brexit wing of the Tory party, and probably prefer no deal at all, to the prime minister’s plan, even before the European Union (EU) starts chipping away at it, which it is sure to do.

What the most pro-EU Tory MPs will do, maybe a dozen or so MPs, I’m not sure, and it probably depends on what final deal May brings back to Parliament, but they might go along with it - perhaps. The Democratic Unionist Party (DUP) might well prefer a no deal scenario, as I think they want a hard land border with the Republic of Ireland, so May has to find a way of keeping them on side, which she has so far. She really has no other choice though, or the numbers in Parliament become even shakier than they look now.

There are 316 Tory MPs at present, with 10 DUP MPs sustaining the government, a total of 326. 326 is the magic number for a majority in the House of Commons, but one MP is the speaker, and seven represent Sinn Fein, who on principle take no part in the British Parliament historically, and show no signs of changing. This effectively reduces the number required for a governing majority to 318.

Labour has 257 MPs, excluding 6 who have lost the whip or are self declared independents. The Scottish National Party has 35 MPs, the Lib Dems 12, Plaid Cymru 4, and the Green Party one, and two other independents. An ‘opposition’ total of 317 MPs, who mostly look likely to vote against the prime minister’s Chequers plan. If this is the case, then it will take only a handful Tory hard line Brexit MPs to defeat whatever the government ends up with as a deal with the EU.

But as I say, I am pretty sure that more than 20 Tories will vote the against the government, and perhaps as many as 30 or so, and it could be even more than that, so May needs twenty odd votes from elsewhere at least, and Labour, together with its ex-MPs, now independents, is surely where May is hoping to get them from. It is not clear to me whether these independents will support the government though, as some may prefer a no deal scenario, so I don’t think these MPs can be taken for granted by the government.

The other target will be disaffected, and pro-EU Labour MPs, of which there are many, but from public statements from MPs like Chuka Umunna, they have expressed opposition to May’s proposals so far. It is possible that the EU will propose something more to their liking, but that might mean even more that 30 or so Tories rebelling.

Pro-EU Labour MPs will probably prefer to vote May’s plan down, so that Parliament could then manoeuvre to get no Brexit rather than no deal. In other words, postpone Article 50. This in turn might lead to a second referendum, which may see us remain in the EU. That is a more attractive prize to these MPs, even if they are nervous of Jeremy Corbyn becoming prime minister. 

There is a cultural resistance amongst Labour MPs to the Conservative party too, not to mention an instinct for self preservation, that will make many recoil from supporting the government. Defeat for the Tories may lead to a general election giving Labour the chance to make a better job of Brexit than the Tories are ever likely to do.

May’s tactics look to be a forlorn attempt to square the Brexit circle, and is almost certainly doomed to failure.   

Sunday, 7 October 2018

Ecosocialists need to talk about technology

Written by Simon Pirani and first published at The Ecologist. Reposted with permission.

Housing for working people is becoming as central an issue for labour and social movements in the twenty first century as it was in the nineteenth and twentieth. And not just decent housing, but housing that is comfortable, aesthetically pleasing – and, crucially, low energy, zero energy or even energy positive.

Here is a wonderful opportunity for our movement to get a grip on technology. We can and should find ways to bring the experience of architects and energy conservation engineers into discussions about housing among community activists and building workers.

A good example of how not to do this is the call for mass installation of air conditioners, made by Leigh Phillips in his article, In Defense of Air Conditioning published by Jacobin.

Improved design

The problem that Phillips purports to address – the cruel effect of heat on millions of urban residents, during summers such as 2018’s – is real enough.

The need to provide ourselves with homes that shelter us from extreme heat as well as colder weather – something ruling classes down the ages have never done for working people – is indisputable.

But Phillips’s techno-fix – mass AC installation, supported by a grand expansion of nuclear and hydro power – is not the answer. He sounds like someone proposing the state-funded distribution of armour-plated BMWs to parents demanding safe cycle routes to school for their children.

Better temperature control can and should be achieved not in the first place by AC, but mainly by better building design, better insulation and better urban planning, in the context of better ways of living generally.

This ABC of AC is widely understood by three groups of people, ignored in Phillips’s article, who spend time thinking about our homes: community groups organising on housing issues; building workers and architects; and energy conservation researchers.

Radical municipalism

Community groups in London, where I live, are battling against right-wing Labour councils that neglect social housing for working people and strike deals with profiteering property developers.

A grass roots alliance last year defeated such a deal in Haringey, in north London, and reprioritised social housing: the potential for 'radical municipalism', to renew cities for their people in ecologically sustainable ways, was spelled out by Gordon Peters, one of the group’s organisers.

Owen Hatherley, a socialist writer on architecture, in a recent call for the Labour Party to get its act together on housing, argued that Labour “ought to look at scaling up the small-scale experiments made in low-energy and zero-carbon construction” by community groups in Leeds and Bristol.

This potential for low-energy and zero-carbon building seems to have passed Phillips by.

Low-energy housing

Building workers and architects, by contrast, are well aware of these potentialities.

In the UK labour movement, the example of City Building in Glasgow, a union-linked co-operative that builds low-energy housing stock, is often mentioned. It uses site-appropriate combinations of solar thermal, photovoltaic, combined heat and power, ground and air source heat pumps and optimisation technologies.

Architects understand perfectly that while AC may sometimes help to cool buildings, it is usually the wrong answer.

When The Economist, that bible of neoliberalism, last month gave qualified support to expanding AC, Richard Lorch of Building Research & Information responded, in a letter to the magazine, that “cities often exacerbate high temperatures” by the heat-island effect; that the micro-climate of streets had to be taken into account; that “it is far better to create cities and buildings that can provide thermal comfort with little energy demand”; and that “the capabilities and technologies exist to provide an alternative to AC”.

Passive techniques

Energy conservation researchers have been writing about those capabilities for at least 40 years.

Amory Lovins, in his classic 1977 pamphlet Soft Energy Paths, estimated – relying partly on analysis by the American Institute of Architects – that design improvements could save 50 percent or more of energy use in offices and 80 percent in some new houses.

The passage of time, and the ballooning of the property development and construction industries, has only amplified this point.

Researchers have repeatedly argued that good insulation, high-reflective materials, shading, windows with low solar heat gain, and “passive” techniques such as underground earth pipe cooling can be combined, in most conditions, to give as good temperature control as energy-intensive heating and cooling systems.

Engineers have proposed that, where AC is essential, oversize systems be avoided and solar power be used.

A research group at Cambridge University synthesised years of advances in building and materials use and reached similar conclusions. 'Passivhaus' techniques could reduce energy consumption in buildings, mostly for heating and cooling, by 83 percent, they showed.

Electricity networks

The Global Energy Assessment (2012) summarised dozens of academic publications on building design, and concluded that they can achieve reductions in gross energy requirements of upwards of 75 percent in new buildings, and upwards of 50 percent in existing buildings.

It is not that that labour and social movements might never want AC fitted anywhere. But it is a myopic and outdated place to start.

Phillips's approach to electricity generation is little better. He acknowledges that AC is very energy-intensive, but claims that nuclear and hydro – and, as he specifies in another article, with a co-author, “a vast build-out of dependable base-load electricity” from those sources – can easily provide the necessary non-fossil energy.

He seems unaware of, or uninterested in, the last 30-plus years of changes in electricity networks, towards decentralised renewable generation and better-integrated distribution.

The trend towards ever-bigger, more centralised, generation started to reverse in the 1980s, with combined-cycle gas turbines (which can easily be used in power stations smaller than earlier coal- or gas-fired ones), and cogeneration (i.e. plants that produce electricity and heat).

Decentralised generation

Since the turn of the century, a much greater degree of decentralisation in generation, and better ways of integrating intermittent renewable sources (i.e. wind that doesn’t always blow and sun that doesn’t always shine), have become possible, thanks to networked computing.

Phillips objects to what he calls “a return to the small and local”, and portrays it as an approach by “greens”, who want to replace multinationals with small businesses.

This is a misrepresentation of where electricity technology is at. The discussion among electrical engineers has, for several years now, focused on further step-changes in computing (so called “smart grids”), that pave the way for systems dominated by renewables and help deal with the always knotty problem of storing electrical energy. For a summary, see Our Renewable Future by Richard Heinberg and David Fridley; for details see e.g. the multiple volumes edited by Fereidoon Sioshansi.

There is potential both in decentralised generation and in more integrated – and in that sense, centralised – networks. The main obstruction to this potential is the corporations that control the systems.

Why, then, should socialists focus on nuclear power - almost always, and everywhere, linked to militarism - and centralised hydro - which has time and time again been fought against by people in the global south, and indigenous people in Canada, for example, whose communities have been threatened, or wrecked, by it?

Fighting back

As many people who think about electricity – from social democratic enthusiasts for energy cooperatives, to engineers working on off-grid systems in the global south – are well aware, the danger is not decentralised generation technologies, or integrated (centralised) networks, but that the multinationals will find ways of enclosing it and commodifying these.

How to fight back against them? That is the discussion that matters.

Phillips’s arguments on AC are underpinned by four ideological fixations about technology that can only obstruct the development of socialist thinking.

First, Phillips identifies an element of good living – being able to keep cool in the summer – with a consumer product, AC. A convincing riposte to Phillips, by Aaron Vansintjan in The Ecologist, deals with this point.

Vansintjan wrote: “Let’s not confuse ‘the right to be cool’ with the right to a consumer good [...] There are plenty of cool alternatives, involving rethinking urban design and how we use public space.” The way towards these alternatives, Vansintjan argued, is “a political movement that links people’s needs to their capacity to have more control over their own lives”.

Capitalist control

Second, Phillips falsely paints each and every expression of doubt about the efficacy of AC as part of a pro-austerity, anti-worker environmentalism. People who advocate passive cooling systems, or suggest that some rich world citizens could turn the AC down a little, are lumped together with Pope Francis, who cited AC as a “harmful habit of consumption”.

Having a go at the Pope is an easy crowd-pleaser in a socialist publication. And of course there are strands of environmentalism that focus on moralistic appeals to reduce individual consumption, rather than the technological, social and economic systems through which fossil fuels are consumed.

But the discussions among community housing activists, building workers, architects and energy researchers are streets ahead of this, i.e. they almost always assume that both improving living standards, and harmonising the relationship between human society and nature, are desirable aims.

One essential contribution socialists could make to this discussion is to underline that, as long as technologies are controlled by capital, they will primarily be directed neither at making people’s lives better, nor at overcoming the rupture between human society and the natural world, of which global warming caused by fossil fuel use is a key element.

The potential of progressive trends in urban planning and building design, or decentralised renewables-based electricity networks, can never be fully realised, or even understood, as long as these processes are controlled by the now-dominant centres of wealth and power.

Superior alternatives

Third, rather than questioning technologies that have been shaped by urban development under capitalism, and thinking about why alternatives have been squashed or sidelined, Phillips appears to see technologies as socially neutral.

He claimed that AC is an “essential, life-saving part of public health” – as though it is the only way to keep cool (it isn’t), and as though its absence is the main reason that people die in heat waves (the research Phillips himself cites shows that AC is a minor issue among many, including the effects of poverty and ill health).

AC, like other technologies, has been shaped by the capitalist social relations in which it emerged. It took off in the USA from the 1920s, and was diffused across the rich world in the post-war boom, not only because it was a way of keeping people cool, but thanks to the profiteering of corporations who produced it. I wrote about this in History Today recently.

Just as car manufacturers lobbied against rail networks and public transport, so AC makers lost no opportunity to favour their product over less energy-intensive alternatives.

We can’t know what a socially just society would have done with AC, but we know that the architects’ superior alternatives have for decades been pushed aside by property and construction companies.

Imaginative optimism

Fourth, Phillips is ideologically committed (a) to action through the state, rather than by society independently of the state, and (b) to economic expansion as a prerequisite of “progress”. He advocated these principles in his book Austerity Ecology (2015).

In the case of AC, this means action through the currently dominant capitalist state. Phillips wrote: “New buildings must come with AC as part of any ‘Green New Deal’”.

His declaration that “we [who?] are capable right now” of producing more electricity is telling. The really urgent thing, in fighting for a socially just society, is not to produce more electricity, but to take electricity out of the corporations’ hands, and transform the way it is distributed and used.

I am very optimistic that, by using it rationally, society as a whole could manage with less, not more. But this will only become clear as and when society takes hold of technological systems.

Phillips said: “Nothing’s too good for the working class”. Too right. So leave your dogmatically contrived techno-fixes at home!

Building on what community groups, building workers, architects and energy researchers have done, give us a serious discussion about technology. Then we can aim at a good life, in cities so wonderful we can only begin to imagine them, built and supplied in ways that don’t deepen the horrible rupture between humanity and the natural world. 

Simon Pirani is the author of Burning Up: A Global History of Fossil Fuel Consumption, Pluto Press, August 2018.

Friday, 5 October 2018

Removing the Borrowing Cap on Councils Alone is not Enough – End the Right to Buy as Well

Well, well, well, the government has finally seen sense and will allow local authorities to borrow as much as they need to, to build new social housing, it seems. I have advocated this course of action before on this blog, most recently last month here.

In her closing address, Theresa May, the prime minister, told the Conservative Party Conference removing the cap on local authority borrowing against Housing Revenue Accounts (HRA) would help the Government achieve its ambition of building 300,000 homes a year by the middle of the next decade.

She said: ‘Solving the housing crisis is the biggest domestic policy challenge of our generation.

‘It doesn’t make sense to stop councils from playing their part in solving it.’

This does seem to be an admission of non-sensible government policy for the last eight years, when voices from across the sector have pleaded with the Tories to do just that. Alternative policies, if we can call them that, have been an utter failure, and we now have a full blown housing crisis. Homelessness has rocketed, and many big cities in the UK have many thousands of rough sleepers on their streets every night.

However, all may not be as it seems. The government has yet to reveal when the cap will be scrapped and whether there will be conditions imposed on councils. A statement from the Ministry of Housing, Communities & Local Government, said the cap would be lifted as “soon as possible”, with more details due in the budget scheduled for 29 October.

Some areas will not benefit from the end of the HRA borrowing cap as they have transferred their entire housing stock, perhaps a third of councils in England, to housing associations, so will be unable to effectively re-mortgage existing stock. These “non-stockholding authorities” do not largely hold HRA accounts.

The housing revenue account (HRA) is a ring-fenced account for the local authority’s housing responsibilities. Revenue, such as council housing rent, is paid into the account and housing costs, such as property management and maintenance, are paid out. It is kept separate from the council’s other funds and accounts by law.

The existing policy on council’s borrowing to build, was relaxed last year, but only allows local authorities to bid for a share of a £1 billion pot. Aside from this, since 2012, rules governing HRAs have restricted the amount councils can borrow to fund house-building. The cap varies from council to council, depending on how much housing debt they already have.

But even if local authorities are allowed to borrow as much as they need to provide social housing, this is just one side of the equation. The other is, the ‘Right to Buy’ policy, whereby sitting tenants are allowed to purchase their home, at generous discounts, and means that almost as fast as new homes are built for rent, they are sold off to private ownership. The best properties are the first to go, and only the less desirable properties remain as social housing. Invariably, these desirable homes end up in the hands on private landlords, and are let at market rents.

Right to buy is costing English councils £1bn - £300m net - a year and cutting the discounts could lead to an extra 12,000 homes being built every year, according to the Chartered Institute of Housing (CIH).

Since 2012, when the discount was increased to £108,000 in London and £80,000 in the rest of the country, 69,467 homes have been sold, the Chartered Institute of Housing revealed in a briefing paper on Tuesday. But construction has only started on 18,958 to replace those homes sold, the CIH has calculated.

CIH research from January found that more than 150,000 social homes for rent in total had been lost between 2012 and 2017 due to right to buy and other factors, like new ‘mixed’ housing developments, replacing council stock. It estimated this figure will reach 230,000 by 2020.

Terrie Alafat, CIH chief executive, said: “Not only are we failing to build enough new homes for social rent, we are losing them at a time when we need them more than ever.” The CIH is calling for Right to Buy, to be at least suspended until the housing crisis can be resolved.

Without ending the Right to Buy, the social housing stock will never be able to provide enough homes for social rent, but that is probably not the government’s intention anyway. It will certainly get more homes built though, and I think that is the aim of the Tory government. More money will be made by private landlords in the longer run too, which again the Tories will welcome.

But why should local authorities be, in effect, building homes for the private sector to profit from? The beauty of council housing is that it pays for itself with rental income, for maybe a hundred years or more, but only if councils aren’t forced to sell it off after a couple of years, meaning they will lose money, rather than recover it. Another example of the corporate welfare state?