Memorandum submitted by Dr Mark Roodhouse,
Department of History, University of York
The author is Dr Mark Roodhouse, Lecturer in
History in the Department of History, University of York, Heslington,
York, YO10 5DD.
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SUMMARY
— Politicians from all parties acknowledge
the need to reduce consumption of energy from fossil fuels if
carbon emissions are to be cut.
— There are two policy instruments
available to politicians: carbon taxes and carbon rationing.
— Carbon taxes are currently the frontrunner,
although doubts have been expressed about their efficacy and equity.
— Personal carbon allowances have been
proposed as an alternative to taxation by the Green Party and
independent experts, and were recently floated by the former Environment
Secretary David Miliband.
— Personal carbon allowances are carbon
rationing by another name; in assessing their feasibility, it
makes sense to consider the British experience of rationing during
the 1940s and 1950s.
— In 1939 and 1940 the government rejected
proposals to rely upon increased taxation to cut consumption because
the impact of tax rises would be inequitable and slow.
— The government introduced rationing
instead as it was the best way to cut consumption quickly and
ensure that reduced supplies were shared out equitably.
— Policymakers rejected tradable rations,
a feature of current carbon rationing proposals, fearing they
would undermine the moral basis of rationing, encourage coupon
fraud and feed inflation, thereby negating the socially progressive
aspects of tradable rations.
— The public accepted that rationing
was a temporary but necessary measure due to persuasive economic
arguments, underlying trust in central government, and positive
memories of rationing during the First World War.
— To introduce a successful carbon
rationing scheme, the experience of World War II indicates that
the government must convince the public that rationing levels
are fair; that the system is administered transparently and fairly;
and that evaders are few in number, likely to be detected and
liable to stiff penalties if found guilty.
1. INTRODUCTION:
A HISTORICAL PERSPECTIVE
ON PERSONAL
CARBON TRADING
(PCT)
1.1 PCT is one of a range of proposed policy
instruments for reducing domestic carbon emissions. There are
several variants of PCT, but they share the following characteristics:
a. The government determines the level of
greenhouse gas emissions from energy use they will permit during
a fixed period ("the ration period").
b. The government allocates emissions rights
to final consumers of fuel and electricity as "carbon units".
c. Final consumers surrender carbon units
when they pay for their fuel and electricity.
d. Final consumers can buy or sell surplus
carbon units from one another.
e. Retailers pass these carbon units back
up the supply chain to a small number of energy suppliers.
1.2 PCT is points rationing of carbon emissions
by another name. As such it bares close comparison with points
rationing of clothes and food during the 1940s. The PCT schemes
currently proposed differ from wartime points rationing schemes
on two important issues:
a. Transfer of units: consumers can gift
or trade their surplus carbon units, unlike during the 1940s and
50s when members of a household could pool their points, but were
not permitted to transfer surplus points to people outside the
household.
b. Ration entitlements: only adults will
receive carbon units and they will all receive the same number
of units whereas all consumers received points with a small number
of groups receiving additional points.
1.3 The idea of carbon rationing is not
new:
a. The environmentalist Mayer Hillman first
put forward the idea in 1991 while head of the Policy Studies
Institute's environmental group.
b. Several variations have been proposed
over the past fifteen years.
c. But proponents have drawn draws only superficial
lessons from history.
1.4 The wartime Coalition government considered
and rejected proposals for tradeable rations and flat rations.
Looking at the reasoning behind these decisions and the experience
of rationing, casts light on the following questions:
a. When should rationing be used?
b. What type of ration should be used?
c. Should rations be tradeable?
d. Should individual allocations be fixed
or variable?
e. How best to make the case for rationing?
2. ALTERNATIVE
MODELS AND
THEIR LIKELY
IMPACT
2.1 Taxation vs. rationing
2.1.1 The current debate about the relative
merits of "green taxes" and PCT mirrors the debate about
motoring taxes and petrol rationing during the Second World War.
The government needed to rapidly reduce civilian consumption of
motor fuel to economise on shipping space and maximise the amount
of motor fuel going to the Armed Forces.
2.1.2 John Maynard Keynes and others suggested
that the government could use the tax system to change civilian
motorists' behaviour instead of rationing petrol. They wanted
to make motoring more costly by raising the duty on petrol, and
the cost of motor vehicle and driving licences.
2.1.3 The government opted for petrol rationing.
Increasing the cost of driving and vehicle licences was too crude
a policy instrument as all drivers bought these licences regardless
of their contribution to the war effort. Increasing licence fees
would have taken too long to change behaviour as drivers bought
their licences annually. Although increasing petrol tax and motoring
taxes would make motoring more expensive and perhaps lead to a
reduction in private motoring, it would have been inflationary
and socially regressive. Rationing allowed the government to ensure
supplies of controlled goods reached the groups who needed them
at a reasonable price.
2.1.4 Conclusion: rationing is the best
way to effect a very rapid change in consumption of a particular
commodity in a crisis.
2.2 Specific vs. group rationing
2.2.1 During the 1940s economists classified
rationing schemes into one of three types:
a. specific rationing of an individual commodity
such as petrol;
b. group rationing of related goods such
as clothing and footwear using points; and
c. general rationing of purchasing power.
The British government operated a mixture of
specific and group rationing schemes, but did not introduce a
general rationing scheme. The government used the tax system to
limit consumer expenditure.
2.2.2 Group rationing of related goods using
points was a wartime innovation. Government economists persuaded
the Board of Trade to points ration clothing and footwear in June
1941. They argued that points rationing:
a. allowed the government to control aggregate
consumption;
b. allowed the government to balance demand
and supply by varying the points value of individual goods within
the scheme;
c. was cheaper and easier to administer than
several specific rationing schemes; and
d. preserved a degree of consumer choice
within a group of products.
2.2.3 The scheme proved so successful that
the Ministry of Food introduced points rationing of some foods
later that year. Reflecting on their wartime experience of government
service, academic economists felt that the introduction of points
rationing was one of their greatest successes and recommended
that future policymakers opt for points rationing above specific
rationing, although it was only feasible for products whose supply
could be guaranteed.
2.2.4 Conclusion: group rationing of related
commodities such as fuel and electricity is cheaper, simpler and
less restrictive than rationing fuel and electricity individually.
2.3 Inconvertible vs. convertible rationing
2.3.1 Tradeable rations were not a feature
of wartime rationing schemes. Members of a household could pool
ration coupons, but they were not permitted to give them or sell
them to people outside of their household.
2.3.2 A black market in surplus points emerged,
which brought previously law-abiding citizens into conflict with
the law and proved hard to stop. Consumers felt morally justified
in using their ration entitlement as they saw fit and did not
consider that gifting or trading surplus points deprived others
of their ration. Law enforcement agencies found it impossible
to police the law effectively, bringing the law into contempt.
2.3.3 It is important to note that black
markets never realised their full potential. Many consumers possessing
the means and motives to evade rationing regulations did not do
so when they had the opportunity. High levels of compliance have
often been attributed to patriotism and respect for the law, but
support for rationing remained high once the war had ended.
2.3.4 Contemporary critics pointed out that
the government could have prevented the emergence of black market
by allowing consumers to freely exchange surplus points. They
also argued that a legal market in surplus points would be socially
progressive as working-class consumers could sell surplus points
to wealthier middle-class consumers.
2.3.5 The government rejected the arguments
for tradeable rations, because policymakers felt that:
a. the trade would undermine the moral principle
of equality of sacrifice as wealthier consumers would not have
to make substantial changes to their lifestyle; and
b. the redistributive effect of trading in
rations which might offset this was an illusion because the cost
of goods would increase to match increased demand.
2.3.6 Conclusions: a black market is an
inevitable by-product of a non-tradeable rationing system. Tradeable
rations avoid criminalising large number of consumers but could
undermine the principle of equality of sacrifice and the socially
progressive effects of trading may be negligible.
2.4 Who should participate?
2.4.1 The architects of the wartime rationing
schemes did not limit rations to adult consumers nor did they
grant all consumers the same ration entitlement. Popular notions
of distributive justice did not accord with the idea of a one
size fits all "fair share".
2.4.2 Policymakers tried to strike a balance
between political necessity and administrative efficiency by limiting
the number of groups receiving supplementary rations. Clearly
identifiable groups such as vegetarians, Jews, young children
and expectant mothers received extra food supplies. Public sympathy
for their plight or the existence of a vociferous political lobby
helped a group's case.
2.4.3 Of particular interest, are the two
groups of private motorists who received a supplementary ration
of petrol:
a. motorists in rural areas received enough
extra to permit a weekly shopping trip and a weekly trip to church;
and
b. motorists who used their private vehicles
for business purposes, such as clergymen, family doctors and vets.
2.4.4 The ration scale for the planned fuel
rationing scheme covering coal, gas and electricity differs from
PCT schemes too. Sir William Beveridge, who drew up the scheme
in 1942, intended all civilians, young and old, to receive a personal
fuel ration. Supplementary rations would be issued to the following
groups:
a. People over the age of 65.
b. The long-term sick or disabled.
2.4.5 Beveridge also planned to vary fuel
rations according to where a consumer lived. He assumed that the
further north consumers lived the more fuel they would need to
heat their homes. Not taking this into account would have penalised
people for living in northern Britain. Beveridge divided the country
into three climatic zones:
a. Scotland and Northern England.
b. Wales and the Midlands.
c. London and Southern England
The further south you went the smaller the fuel
ration you received. The public acceptability of the scheme was
never tested because of determined resistance from Conservative
backbench MPs and mine owners.
2.4.6 Conclusion: while a universal flat-rate
ration is easy to administer, it conflicts with popular notions
of fairness. Rationing schemes have to balance administrative
simplicity and public pressure to grant exceptions.
3. PUBLIC ACCEPTABILITY
3.1 The Minister of Food Lord Woolton understood
that popular support for food rationing depended upon the public
feeling that ration levels were fair and that rationing was administered
fairly. He referred to this as "fair shares and fair play".
Today, political philosophers would talk about distributive justice
and procedural justice.
3.2 Many civilians did not appreciate the
economic case for rationing, but trusted the government's judgement
enough to give rationing their support. They supported rationing
because:
a. it had worked so effectively during the
First World War; and
b. it was a temporary emergency measure.
Public support was wide and shallow as it did
not rest upon a full understanding of the economic need for rationing.
3.3 Given the provisional nature of public
support for rationing, it was crucial that it worked smoothly.
In addition to fair shares policies, administrators had to ensure
that:
a. appeals and complaints were handled quickly,
efficiently and equitably; and
b. rations were always honoured, with everyone
able to obtain their full share when they wanted.
3.4 Enforcement was very important. Evaders
had to be detected and punished swiftly and publicly. The authorities
understood that support for control could be undermined if the
public thought significant numbers of people avoided or evaded
the regulations with impunity.
3.5 Policing methods and sentencing had
to be proportional. The use of undercover policing tactics to
detect minor offences and harsh sentences for "technical"
offences threatened to undermine support for food rationing between
1942 and 1944.
3.6 Conclusion: given contingent consent
for rationing, ensuring procedural justice is as important as
ensuring that ration levels are in accord with popular notions
of distributive justice.
4. GENERAL CONCLUSIONS
4.1 Historical perspectives on the desirability
of PCT
— Rationing is an effective policy
instrument for swiftly reducing personal consumption in times
of crisis.
— PCT, or carbon rationing, would dramatically
cut domestic energy consumption.
— Taxation would work more slowly and
its effects on consumer behaviour are harder to predict and control.
4.2 Historical perspectives on operational
feasibility
4.2.1 Feasibility of a rationing system
— Wartime and post-war governments
rationed the British people with great success using paper-based
technologies; today, the technological challenges would be far
greater.
— Rationing depends on a national identity
scheme to establish people's entitlement; one of the biggest challenges
for PCT would be the civil liberties issues raised, rather than
implementing the scheme itself.
4.2.2 Feasibility of PCT
— The British experience of points
rationing of food and clothing shows that this is preferable to
rationing individual commodities.
— Allowing consumers to gift or trade
surplus carbon units would prevent the emergence of a black market
in spare carbon units.
— However, tradeable rations could
undermine the principle of equality of sacrifice and the redistributive
effects of trading in surplus carbon units could prove to be exaggerated
or non-existent.
4.3 Historical perspectives on the public
acceptability of PCT
— Persuading the public of the need
for carbon rationing is probably the biggest hurdle policymakers
will have to face.
— Public support for rationing during
the 1940s suggests that consumers will accept carbon rationing
as a temporary crisis measure, provided they trust the government's
judgement.
— The government would have to convince
the public that:
a. the risk of catastrophic climate change
is serious and increasing in severity;
b. such climate change poses a grave threat
to British society and will have a direct and dramatic impact
on their way of life if unchecked;
c. catastrophic climate change can be prevented
if the government takes immediate action, implementing a strategy
to reduce carbon emissions;
d. a carbon rationing scheme is central to
this strategy and without it the strategy will fail;
e. the scheme is a temporary measure during
the transition from a high carbon economy to a low carbon economy
(it will be removed when the unit price and/or consumption levels
drop below a certain level);
f. ration levels are fair (ie in accordance
with popular notions of distributive justice and not those of
political philosophers);
g. the system is administered transparently
and fairly; and
h. evaders are few in number, likely to be
detected and liable to stiff penalties if found guilty.
August 2007
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