When in doubt, kick the can down the road. That is what has happened with the UK energy bill after weeks of bitter negotiations between the Treasury and the department now known across Whitehall as DoSAC – after the disfunctional organisation in the television comedy series The Thick of It.
A couple of weeks ago, I said the bill would seriously disappoint some participants in the debate. The conclusion as announced – and we will only see the detail next week – seems likely to disappoint everyone.
The core decision is that long-term policy is postponed until 2016, after the next election. But the energy business does not work to election timetables or four-year horizons. Most investments are designed for decades, and in some cases, such as nuclear and power generation, the payback for investors won’t come until 10, 15 or even 20 years into the project. The investors, it is always worth remembering, are not men in black hats but ordinary people trying to decide what to do with our collective savings – in particular our pension funds. Read more