What caught my eye this week.
They say you should never let a crisis go to waste. But in his Spring Statement Chancellor Rishi Sunak blew it with two crises at once.
Cutting fuel duty [1] was a small, pointlessly populist move. Both the cost and consequences are pretty modest in the grand scheme of things.
But the message it sends is dire.
The cost of a cut
The AA reckons only half [2] the fuel duty cut will be passed on to motorists. What’s left won’t make much difference to many households.
Maybe £100 a year saved on average for a one-car family.
The people and businesses who burn a lot of fuel driving will of course save more. But they are exactly the ones that the tax system should be nudging towards alternatives.
You might say the cost of living crisis is an emergency. Well let’s remember that only six months ago the UN dubbed [3] the latest nightmare IPCC report on climate change ‘Code Red for Humanity’.
The scientific consensus is that burning fossil fuels is heating the planet. And while there’s more debate about the size and scale of the consequences [4], the precautionary principle should have us acting to reduce this warming at every turn.
The surging price of gas and oil is a perfect casus belli to put Britain on the kind of war footing required to remake us into a low-carbon economy.
That is ultimately what will best preserve our standard of living and prosperity.
Instead Sunak subsidises more fossil fuel burning to cheers from MPs.
Paying for Putin
I know a few Barry Blimps [5] out there imagine themselves to be bold contrarians by refuting climate science.
Well whatever – because today even they have a glaring reason not to be encouraging the burning of more fossil fuels.
Obviously I’m talking about Russian’s war with Ukraine.
At the same time as taking unprecedented economic action against Putin’s kleptocracy, Europe is paying up to $1 billion a day [6] for Russian fossil fuels.
This money props up the regime and the war. We’re not so much talking good cop / bad cop as a bad cop / whisk the prisoner away for a luxury weekend in Dubai cop.
This reliance should have been dialed back years ago. The second best time is now.
Unlike Europe, Britain gets little of its oil or gas directly from Russia. But it’s not nothing [7] – about 3-5% of gas and 6-8% of crude oil. So our hands are not clean. Some of your pounds at the pump go to Putin.
Still, it’s little enough that we could credibly attempt to slash what we spend on Russian fossil fuels to zero, fast.
Take back control
Lopping even the maximum 5p fuel duty cut off a litre of petrol costing £1.65 represents about a 3% saving.
Would it have been so onerous to ask motorists to skip one trip out of 30, or to pursue some other fuel saving measure instead? I don’t think so.
Yes, the sums are relatively trivial. What matters more is the signal.
If we’re to tackle climate change without putting on the hair shirts some argue it’s already too late for, every decision must be the right one. A public gullible enough to vote for Brexit cannot be told this transition will be cost-less and painless. They will bridle at every new initiative.
Professional wrong-man Nigel Farage is already waiting in the wings [8] with his next self-destructive campaign – a referendum to abandon our climate goals.
Farage might dream of the waters of the Straits of Dover rising. But anyone with kids – or a passing interest in the future of humanity – shouldn’t tolerate his bullshit twice.
I happen to agree that in the long-term – as Boris Johnson said recently [9] – “green electricity isn’t just better for the environment, it’s better for your bank balance.”
But in the medium-term it will be a costly and disruptive transition. We need to take this seriously. The public must know there’s work to do and a bill to pay. As many as possible must buy into it.
To quote [10] the UN Secretary-General again, the knee-jerk rush for alternative fossil fuels in response to the Russia-Ukraine war is “madness” that will derail our already-insufficient climate goals.
It’s no surprise to see a man with Johnson’s moral compass dash off [11] to to Saudi Arabia to seek to replace one murderous autocrat with another.
But as a nation we must do better.
Where’s my tax cut?
Around this point somebody is typing a comment saying that living in my ivory tower – um, in a two-bed flat in a London suburb – I don’t get the pressure the average person faces due to inflation.
Never mind that I read and link every weekend to various articles about exactly these pressures.
I’ll just conclude by pointing out that the fuel duty cut isn’t even fair by that measure.
Many people don’t drive. So they won’t benefit directly from a fuel duty cut. But they’ll pay for it via taxes.
Many people can cut back on non-essential driving. They can’t cut back on, I don’t know, food. Yet they’ll pay for the fuel duty cut for motorists.
The fuel duty cut is a specific tax break for an activity that threatens our financial future [4] due to climate change – and maybe even our corporal one given the worst-case scenario [12] from Russia.
Fuel rationing via a national speed limit or driving curfews or surcharges would have been fairer.
Alternatively, the money spent on cutting fuel duty could have gone instead on free public transport.
Then again much of the country is less well-served than London by public transport – another problem to fix, not a reason to support fossil fuel subsidies – so perhaps Sunak could have just sent everyone a cheque for their share of the £2.4bn cost [1] of his fuel duty cut?
That way we could each ease the pressure on our finances however we saw fit.
Have a great weekend.
From Monevator
Is your early retirement under threat from an unlucky sequence of returns? – Monevator [13]
How to estimate care home costs – Monevator [14]
From the archive-ator: Money is power – Monevator [15]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [16]
Spring Statement: what it means for your money – Which [17]
Spring Statement: what’s in it for investors and householders? [Search result] – FT [18]
Spring Statement: personal calculator – Guardian [19]
Spring Statement: 12 nasty details hidden in the small print – The Mirror [20]
People face the biggest drop in living standards since 1956 – BBC [21]
Goldman Sachs sees rising recession risks – ThisIsMoney [22]
Weekly Covid cases increase by 1m in UK, figures show – Guardian [23]
Next boss sees its prices rising 8% in second half of the year – ThisIsMoney [24]
Buffett’s Berkshire Hathaway to buy insurer Alleghany for $11.6bn – CNBC [25]
[26]Strange things are afoot at the London Metal Exchange – Front Month [27]
Products and services
Read your energy meter on 31 March, just before prices rise – Guardian [28]
Are vampire electrical devices sucking cash from your bank account? – ThisIsMoney [29]
How to get the best deals on 90% and 95% mortgages as a first-time buyer – Which [30]
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor [31]
UK green savings bond sales ‘underwhelming’ [Search result] – FT [32]
The economics of installing solar panels – ThisIsMoney [33]
Price of ASDA pasta surges 56% as supermarket inflation bites – ThisIsMoney [34]
Homes with glorious spring gardens, in pictures – Guardian [35]
Getting to index funds the hard way mini-special
One man’s long road to passive investing peace – Humble Dollar [36]
How I lost $150,000 in a day – Young Money [37]
Comment and opinion
The Great Resignation might be followed by the Great Regret… – Guardian [38]
…though millennials are apparently still rethinking work – Guardian [39]
Which bond types provide the most diversification benefit? [US but relevant] – Morningstar [40]
10 simple tips for better investing – Peter Lazaroff [41]
When the optimists are too pessimistic – Of Dollars and Data [42]
Chinese stocks: the road to nowhere – Morningstar [43]
When is the right time to retire? – The Evidence-based Investor [44]
What happens when you buy stocks in a bear market – A Wealth of Common Sense [45]
Pain and pleasure – Banker on FIRE [46]
Afford Anything with Paula Pant [Podcast] – White Coat Investor [47]
How to manage finances and romance after 50 – ThinkAdvisor [48]
What to do during a recession: a timeless strategy – Darius Foroux [49]
Buy what you value – Humble Dollar [50]
Crypt o’ crypto
Multicoin Capital may be the best performing VC fund of all time – The Generalist [51]
Inside the bubble – Seth Godin [52]
Naughty corner: Active antics
Via negativa: what should fund investors not do? – Behavioural Investment [53]
Russia in Ukraine: let loose the dogs of war – Musings on Markets [54]
Keeping it simple in VC – Fred Wilson [55]
The case for quality stocks [Podcast] – Morningstar [56]
Factors do work, but don’t try to time them – The Evidence-based Investor [57]
Kindle book bargains
No Spin: My Autobiography by Shane Warne – £0.99 on Kindle [58]
Posh Boys: How English Public Schools Ruin Britain by Robert Verkaik – £0.99 on Kindle [59]
Poverty Safari: Understanding the Anger of Britain’s Underclass by Darren McGarvey – £0.99 on Kindle [60]
Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success by Sean Ellis and Morgan Brown – £0.99 on Kindle [61]
Environmental factors
IPCC scientists to examine carbon removal in key report – BBC [62]
Checking in with the iShares Global Clean Energy ETF – DIY Investor UK [63]
It’s currently far cheaper to charge an electric vehicle than buy gas in America – CNBC [64]
Carbon risks and credit spreads – Klement on Investing [65]
Off our beat
How people think – Morgan Housel [66]
The Russians fleeing Putin’s wartime crackdown – The New Yorker [67]
Covid success to Covid disaster: what happened in Hong Kong? – Grid [68]
Memento Millennial – Ayesha A. Saddiqi [69]
And finally…
“You don’t see something until you have the right metaphor to let you perceive it.”
– James Gleick, Chaos: Making a New Science [70]
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