Examination of Witnesses (Questions 20-25)
PROFESSOR TIM
JACKSON
27 JANUARY 2009
Q20 Mr Challen: In relation to part
of what you have said, we have quite a number of regressive influences
at work: climate change policy, like the EU ETS, the renewable
obligation and other things that add to household costs for energy
use. What specific thing do you think could be introduced to compensate
people for that and try to keep them out of fuel poverty?
Professor Jackson: What households
are facing at the moment is an increase in the unit cost of energy.
That might increase with the carbon price. The total cost of energy
to that household, the total cost of the service of staying warm
and achieving the services they want in the household is partly
about the unit cost of energy but it is also about how much energy
is needed to deliver that service. The really important thing
is to be able to achieve measures not that attack the unit price
of energy, but attack the overall cost to households of energy
services; and we know what the options are for that; they are
about fabric measures, they are about improved appliance efficiency
and they are about, to some extent, relatively simple changes
in behaviour that do not change quality of life but do reduce
energy consumption. We know what that package of measures is that
would both reduce the overall cost of achieving those services
whilst at the same time incentivising reduced fuel use through
higher fuel prices. Those things exist. We also know some of the
difficulties and dangers in achieving those things, and they are
about access to capital, access to know-how, the fact that it
is a low priority on some people's agenda; and for the poorest
households that they simply do not have the capabilities, either
financially or in terms of their time and their ability to access
the knowledge that is needed. The measures that come out of that
are, again, pretty straightforward; they suggest that you have
to make capital accessible for those investments at a broad level,
across households, and in particular with the fuel poor—that
you have to provide infrastructures to improve the built environment,
improve the building environment, and you have to make that part
of the working model of some agency/agencies, enterprise or business,
that it has to be part of the modus operandi, the ethos
of the business. We had a unique opportunity to do that, I believe,
in the suggestion in the 2006 White Paper for a supplier obligation,
which would have imposed a cap on energy supplies in terms of
the amount of energy they could supply, the carbon from the energy
they could supply to households. That cap, if properly executed,
could have changed the business model of the energy suppliers.
It would have allowed us to develop energy suppliers into energy
service companies in a way that could tackle the aspects of fuel
poverty, invest in building infrastructure, and at the same time
reduce the overall fuel bills in households across the nation.
One of our concerns at the moment is that that indication of change
and the application of a capping trade system in relation to suppliers
seems to be being moved away from in policy, and at this point
in time it looks as though the Government is favouring an extension
of the measures-based approach which we have had for a number
of years, which has implemented some energy efficiency but has
not changed the basic build—business model, and under which
energy consumption in households has increased. There is clearly
a need for a different approach. That approach, we believe, is
to be able to transform business enterprises and agencies into
things that can effectively get energy efficiency into all households
and in particular the fuel poor.
Q21 Mr Chaytor: I want to ask about
the attitude of the Treasury to the work that you have been engaged
on: specifically, why do you think the institutional culture of
the Treasury has always been so wedded to neo-conservative ideas?
Professor Jackson: There is obviously
a sort of cultural history aspect to that question, and it is
an interesting cultural history. It is fascinating in the sense
that it applies across the broadly Anglo-Saxon nations, that there
is a well known split between liberalised market economies, which
are the US, Canada, New Zealand, Australia, the UK; and the so-called
coordinated market economies where the emphasis has been much
more around regulation of the labour market and coordination between
enterprises. The cultural answer to that question is that we have
emerged and possibly even led that culture of neo-classical liberalised
market economy and are therefore historically wedded to it to
an extent.
Q22 Mr Chaytor: At this point in
time, when there is growing awareness that that economic thinking
that has collapsed, do you think it is going to be possible to
shift the culture of the Treasury, or do you think they are still
wedded to getting through the current crisis and just taking us
back to where we left off a couple of years ago?
Professor Jackson: No, I think
this is the point in time in which there is an enormous opportunity
for change, and to some extent an appetite for change, because
there is an understanding that at least some of what went under
the auspices of being a liberalised market economy have failed,
and they have failed spectacularly, and particularly the deregulation
of the financial sector leaps out as being one of those things.
But in the questioning of that and the questioning of the boundaries
between the private sector and the public sector in that most
holy of holies in relation to the liberalised market economy,
it opens up almost anything really, certainly in a—not necessarily
in the eyes of Treasury spokesmen, but certainly in the eyes of
those who are doing blue-skies thinking about how economies develop.
I believe there is an enormous window of opportunity. In addition
to the cultural differences, I would say that both liberal market
economies and coordinated market economies are wedded to the idea
that economic stability depends upon economic growth; so they
are divided over the best way to achieve it, but they are united
in the idea that economic growth is the aim. From the point of
view of sustainability, this is a piece of work that we are taking
forward on prosperity, on re-defining prosperity, which questions
that relationship. What is clear is that it does provide Treasury
with the rationale to be wedded to whatever it believes will stimulate
economic growth for as long as economic growth is seen as the
basis for economic stability. To some extent, you would have to
argue that it is a legitimate, essential role of government to
ensure economic stability. If the mechanism for that is economic
growth, then that also explains some of the allegiances.
Q23 Mr Chaytor: The re-defined programme
will be translated into a report quite soon.
Professor Jackson: Yes.
Q24 Mr Chaytor: Do you have a publication
date?
Professor Jackson: We are looking
at the end of March/early April for that.
Q25 Mr Chaytor: In that report, without
pre-empting the conclusions, will you be challenging the existing
methodology of calculating GDP, or to what extent do you think
that is a problem for the economy as a whole?
Professor Jackson: We were challenging
existing methodology for challenging GDP—not quite—certainly
challenging the primacy of GDP as the appropriate measure for
measuring prosperity, lasting prosperity in forward terms, and
in challenging the assumption that economic stability has to be
achieved through continual, never-ending growth.
Chairman: I am afraid we are probably
out of time. There may be some other points we might like to put
to you in writing, if we may, some further issues that we hoped
to explore which are important, but in order to preserve the integrity
of our timetable we have to stop there. Thank you very much indeed
for coming.[1]
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