* TALKING POINT, ANDY MAYER
* iN THE MEDIA
* EPICENTER ABROAD
* IEA DIGITAL
* YOU'RE INVITED!
* CALLING ALL STUDENTS!

A year that started with fossil fuel majors promising ([link removed]) to invest near ([link removed]) £45 billion in the UK’s precarious energy infrastructure over the next decade now ends with Shell putting half of it ‘at risk ([link removed]) ’ due to the new government’s windfall taxes.

That investment was not just for oil and gas, but mostly for zero-carbon projects. Any reconsideration could damage both UK energy security and the low carbon transition. This was not only predictable, but predicted. I noted in April that windfall taxes would:

“discourage investment, doubly so if investment relief is removed. A folly when the issue is shortage of energy supply.”

This analysis was based on prior evidence that shows an investment collapse following windfall taxes both in the 1980s and 2010s. By the end of last month we were less polite, comparing ([link removed]-) the expected Tory socialist ([link removed]) tax mania with the “politics of a banana republic”.

Despite this, Hunt’s Autumn Statement raised ([link removed]) taxes on the North Sea by 10 points, to an overall level of 75 per cent until 2028, albeit partially offset by investment allowances. In May, it was 40 per cent. He added proposals for a 70 per cent rate on older renewables and nuclear schemes returns above £75MWh (or around 1.5 times the average market price in the 2010s) – something that has attracted further investment threats from Scottish Power ([link removed]) and SSE ([link removed]) .

These levels compare with a general rate of UK corporation tax of 19 per cent (rising to 25 per cent next April). They compare with a Saudi Arabian rate of 20 per cent on gas exploration and 50 per cent on oil and other hydrocarbons, and a 21 per cent headline federal rate in the US before adding state taxes but removing deferrals and deductions. It’s not hard to see where investors should invest, and the UK government evidently agrees, with speculation of a new US LNG-based ‘energy security partnership’ pending ([link removed]) .

We are then in the mad situation where our government is deliberately throttling our own energy industries, banning fracking and taxing everything else, while actively seeking more imports. All while apparently still committed to a British Energy Security Strategy ([link removed]) that hopes for “greater energy independence”. This comes also at a time when there is a serious and elevated risk ([link removed]) of blackouts and freezeouts next winter, due to equally poor thinking across Europe ([link removed]) . This makes no sense beyond short-term headline chasing, reacting to the equally thoughtless tax demands ([link removed])
of the Opposition. Perhaps I was unkind to banana republics.

Andy Mayer
IEA Chief Operating Officer and Energy Analyst

iN THE MEDIA

Off the rails... This week, the RMT announced a new slate of strike action to take place over the festive period, which is likely to cause significant disruption at one of the busiest times of the year.
[link removed]
Writing for CapX ([link removed]) , IEA Editorial and Research Fellow Professor Len Shackleton argued that continuing to demand unrealistic pay increases could end up being self-defeating. He noted:

"Given the apparent stalemate, union persistence in demanding inflationary pay increases without changing archaic working practices is very short-sighted. However, forcing Network Rail and the train operating companies to accept these demands could end up being a Pyrrhic victory for the unions. Given the railways’ finances, it would almost inevitably lead to reductions in services, closures of parts of the network and, ultimately, large-scale redundancies".

[link removed]

The name's Bond... In an article for The Daily Telegraph ([link removed]) , IEA Economics Fellow Julian Jessop highlighted the taxpayers’ liability for the losses made by the Bank of England’s Asset Purchase Facility (APF).

He concluded that while the Treasury guarantee on the Asset Purchase Facility and the payment of interest on reserves were not a big deal when APF holdings were small and official interest rates were low, the changing circumstances now justify a rethink.

[link removed]

Going solar... Quoted In City AM ([link removed]) , IEA Chief Operating Officer and Energy Analyst Andy Mayer responded to reports that the government is considering tightening planning laws around solar farms in “the middle of an energy and growth crisis.” Andy posited:

“They claim it’s about food security, but the UK depends on trade for half our food, and modern tastes are geared towards many things we will never grow. It’s really about nimbyism. The Government, whatever they say at climate summits, are more worried by angry resident associations than warmer summers.”

[link removed]

Logic cast to the wind... Andy
also discussed windfall taxes with Nigel Farage on GB News ([link removed]) . Andy criticised the measure, regarding it as 'Tory socialism'. Watch here ([link removed]) .

[link removed]

Inflationary inertia... IEA Head of Lifestyle Economics Christopher Snowdon also wrote for The Daily Telegraph ([link removed]) , highlighting the government’s failure to tackle inflation. Christopher wrote:

“The Conservative Party has since been boasting on Twitter about its plan for ‘tackling inflation’ but details of this plan are yet to be forthcoming. It seems to involve spending an extra £11 billion on health and education, increasing the minimum wage by a record amount and hiking up pensions and benefits by 10.1 per cent.

[link removed]

Forecasting error... IEA Head of Public Policy Matthew Lesh
wrote for The Daily Express ([link removed]) responding to OECD figures projecting that the UK economy is set to contract by 0.4 per cent in 2023. On the issue of inflation, Matthew noted:

“despite the tendency by many to blame external factors, the OECD found that more than half of the UK’s current inflation comes from the demand side. This means the Bank of England’s excessively loose monetary policy in recent years, the hundreds of billions of pounds of quantitative easing that resulted in too much money chasing too few years."

[link removed]

Waiting game... Matthew
also appeared on TalkTV ([link removed]) to discuss NHS waiting times and the case for reform. Watch here ([link removed]) .
[link removed]

As an educational charity, the work we do is entirely funded by donations. If you are able to help, please click here ([link removed]) or get in touch with our Development Director Angela Harbutt at [email protected] (mailto:[email protected]?body=Dear%20Angela%2C) . We thank you for your continued support.
And why not get Amazon to donate too?
All you have to do is to start shopping on [link removed] ([link removed]) and pick the Institute of Economic Affairs Limited as your chosen charity. The IEA will then receive 0.5% of your spending on most items. Everything else remains the same (and at no additional cost to you).

EPICENTER ABROAD

IEA Head of International Outreach and EPICENTER Director Adam Bartha recently took part in a joint event by the European Liberal Forum and NEOS in Vienna, where he discussed the long-term prospects for inflation.

As multiple European countries battle with inflation rates above 20 per cent, Adam continues to make the case for regulatory and tax reforms to alleviate the cost-of-living crisis across the continent.

Adam argued for governments to allow a more diverse energy production, including fracking and nuclear, to drop protectionist policies including the Common Agricultural Policy that makes basic food items more expensive, and to cancel punitive tax rates on certain consumer goods.

[link removed]

Read EPICENTER’s recent Discussion Paper on How Governments Fuelled the Cost of Living Crisis ([link removed]) and what policies should be implemented to stop this negative trend.

IEA DIGITAL

[link removed]

Bottom of the class... Following the OECD's recent report that estimates the UK economy will contract by 0.4 per cent next year, IEA Head of Public Policy Matthew Lesh interviews the Head of Policy at Britain Remade, Sam Dumitriu, to examine the main roadblocks that stand in the way of economic growth. Watch here ([link removed]) .

[link removed]

Parallax Views... As critical race theory becomes more prevalent, some are leading a cultural war to ensure their rights are protected. In this episode of Parallax Views, IEA Head of Cultural Affairs Marc Glendening spoke to nurse and activist Amy Gallagher to discuss her ongoing legal battle with the Tavistock and Portman NHS Foundation Trust. Watch here ([link removed]) .

YOU'RE INVITED!

[link removed]

On Monday 12 December, 12.30-2.30pm, the IEA Book Club will be hosting journalists Harry Cole and James Heale to discuss their latest book “Out of the Blue: The inside story of the unexpected rise and rapid fall of Liz Truss”. This event will take place at the IEA Westminster office and will be chaired by IEA Head of Public Policy Matthew Lesh.

Despite being written off by even her closest colleagues, Liz Truss slowly but determinedly achieved her goal of taking over 10 Downing Street – only to instantly plunge her administration into chaos and announce her resignation after a record-breaking 44 days. How did she do it? And what exactly went so wrong?

With unrivalled access and insight, award-winning political journalists Harry Cole and James Heale provide the answers, drawing on interviews with Truss’s friends and supporters, as well as her worst critics and rivals, from Kwasi Kwarteng to Michael Gove.

Tracking Truss’s transformation from geeky teenage Lib Dem to Tory PM, with the inside scoop on her first – and only – month in office, Out of the Blue is the unmissable behind-the-scenes account of Britain’s shortest-serving Prime Minister.

This event is exclusive to IEA Book Club members. For more information on the Book Club, please contact [email protected] (mailto:[email protected]) or follow the link here ([link removed])

CALLING ALL STUDENTS!

[link removed]

Global Internship... The Initiative for African Trade and Prosperity partners with a plethora of think tanks across Africa and works with them to make their voices that push for greater free trade more effective and louder. If you are interested in African trade and development, want to work with cutting-edge think tanks across the continent, and develop your knowledge on the biggest issues facing Africa, then this internship is for you!

The IATP is a project of the Institute of Economic Affairs and the Vinson Centre at the University of Buckingham. We are housed at the Vinson Centre at the University of Buckingham, where we work under the same roof as dozens of world renowned academics and popular think tanks.

Having an interest in African affairs is vital. The internship will provide you the exciting opportunity to work directly with the IATP’s Director, Alexander Hammond and our 11 partnered think tanks across Africa. Your work will be vital to the IATP, and main tasks include creating innovative social media outreach methods, assisting with our newly created YouTube and Twitter pages, and generally supporting the IATP by conducting an array of meaningful work. You will also have the opportunity to execute exciting research projects and write your own articles.

Candidates interested in the internship should be able to commit for a 15 hours per week, for at least eight weeks. This is a remote internship, though occasional work from the University of Buckingham or the IEA offices in Westminster would be beneficial.

Click here ([link removed]) for more details on how to apply.

Future thought leaders... We are delighted to announce that applications for our Future Thought Leader Programmes for sixth-formers and undergraduates are now open! There will be two weeks for sixth formers in April, and one in July. The undergraduate programmes will be in July and August.

You can find out more information on the programmes, and how to apply here ([link removed]) .

[link removed]

Monetary policy essay price... Applications remain open for the monetary policy essay prize, organised by the IEA, the Institute of International Monetary Policy Research and the Vinson Centre at the University of Buckingham.

This year's question is: Are the central banks to blame for the current inflation episode?

To be in with a chance of winning up to £500, you must submit your answer by 6 January 2023. Further details on how to enter can be found here ([link removed]) .

============================================================
** Twitter ([link removed])
** Facebook ([link removed])
** LinkedIn ([link removed])

You are receiving this email from the Institute of Economic Affairs
** Unsubscribe ([link removed])
from this list.

© 2022 Institute of Economic Affairs
Institute of Economic Affairs 2 Lord North Street London, London SW1P 3LB United Kingdom

Registered in England 755502, Charity No. CC/235 351, Limited by Guarantee

** Forward ([link removed])
this email to a friend

This email was sent to [email protected] (mailto:[email protected])
why did I get this? ([link removed]) unsubscribe from this list ([link removed]) update subscription preferences ([link removed])
Institute of Economic Affairs . 2 Lord North Street . London, London SW1P 3LB . United Kingdom