54 episodes

Helm Talks is full of short, 'pull no punches' insights into:
Energy & Climate;
Regulation, Utilities & Infrastructure;
Natural Capital & the Environment.

Professor Dieter Helm is Professor of Economic Policy at the University of Oxford.

Helm Talks - energy climate infrastructure & more Helm Talks - energy climate infrastructure & more

    • Business
    • 4.9 • 11 Ratings

Helm Talks is full of short, 'pull no punches' insights into:
Energy & Climate;
Regulation, Utilities & Infrastructure;
Natural Capital & the Environment.

Professor Dieter Helm is Professor of Economic Policy at the University of Oxford.

    Fudging the fiscal rules

    Fudging the fiscal rules

    The Labour Party, like the Conservatives, has committed to borrow only to invest, to fund current spending only from current income, and to get debt as a percentage of GDP down. As ever when it comes to fiscal rules, the devil is in the detail, and these rules are less than they seem. Labour acknowledges that this may take some time, but its promise is that it will meet its fiscal rules by achieving the highest growth rate in the G7.

    As with the Conservatives, Labour knows that these fiscal rules leave plenty of wriggle room. The deadline on current spending bites only gradually and that for the debt to be coming down is by the end of its first Parliament. More importantly, current spending on desperately needed capital maintenance could be renamed as “investment” expenditure (as Gordon Brown did with education and health spending), leaving the next generation to pick up the tab for what should come out of current income. For both parties, “growth” is assumed to help fix the problems, with Labour targeting the highest growth rate amongst the G7 by the end of the Parliament. Neither party has any plans to tackle the lack of domestic savings, and hence the almost complete reliance on foreigners to lend them the money.

    The fiscal rules allow large scope for fudge. If either party really meant to be fiscally credible, it would need to be willing to entertain either serious tax rises or serious reductions in spending (or both). Fiscal rectitude is easier to announce than it is to deliver.

    • 15 min
    Failing utilities – is special administration the solution?

    Failing utilities – is special administration the solution?

    What is to be done about the UK’s failing utilities? The current back-stop is special administration, opening up the possibility of wider restructuring. In all cases it is the structure that needs to change if there is to be a stable investment framework for the next couple of decades.

    In the case of Thames Water, if the special administer is called in, the assets could be taken over in the short term and passed on to other owners. The trouble is that the current owners are mostly foreign, and the UK is very dependent on foreign investors as it is a net dis-saver. Such dependence creates a big problem: we are beholden to the kindness of strangers to invest in all our utilities, but these investors have many alternative options to place their money.



    Special administration would nevertheless provide a great opportunity to break Thames up, both geographically and by service. It need not lead to any increase in government spending other than very short-term guarantees on the debt. There could be a London Water and a Greater Thames Water, divided between sewerage and water supplies, all listed. Separating out sewerage could help to deal with the large CAPEX required through a ring-fenced ten-year improvement programme, with bespoke regulation and longer-term funding and finance arrangements.



    A structural approach might also work for Network Rail, with greater integration, bringing the train operators and rolling stock companies back into the frame. For Royal Mail, there is a fundamental structural issue relating to service provision – put letters back into the Post Office as a public service, separated from the parcels delivery service.



    Introducing stability and a longer-term approach could at least create a more solid and investable infrastructure, which may then address the challenge of how to make these utilities more attractive to outside investment. Fudging Thames, Network Rail and Royal Mail now will give us another decade of failures and crises, which in turn will turn out worse for foreign investors.

    • 14 min
    Fiddling the figures – iron fiscal rules are not what they seem

    Fiddling the figures – iron fiscal rules are not what they seem

    Iron fiscal rules that allow borrowing only for investment might seem like a sensible strategy, but the figures have repeatedly been fiddled to make the UK appear fiscally responsible. Both main political parties have been playing this game for forty years. From Thatcher onwards, Conservatives used privatisation and PFIs (private finance initiatives) to move debt off the public books to the private sector. Gordon Brown opted for the PPP (public–private partnership) model for the London Underground, and perfected the art by re-categorising some public spending (e.g. on health and education) as “investment” in order to meet the requirement to borrow only to invest.



    The current approach, however, is much more serious. Governments are now borrowing to maintain our assets, calling this “investment”, as are the utilities. Fixing the school roofs and the hospital buildings, and, for the utilities, the sewers, the potholes, the sad state of the railway infrastructures, patching up the electricity networks, and maintaining the natural environment, should be current expenditure, not treated as new investments. We are borrowing from the next generation to pay for the current maintenance. Capital maintenance should be a current expenditure not a capital one.



    Sustainable public finance would (with a few exceptions) require debt to only ever be for investment that genuinely enhances assets and creates new ones, such that the next generation receives better assets. When it comes to the environment, we need to pass it on in a good state, not to simply say we will continue to borrow and live beyond our means. Government needs to explain honestly and openly how it will balance the books. Pretending that our fiscal rules are held with an iron fist whilst actually including the capital maintenance is bad accounting. The numbers are huge. The next debt crisis will follow as the unsustainable is not sustained.

    • 13 min
    Three energy policies

    Three energy policies

    When it comes to addressing the trilemma of energy policy in the UK (net zero, energy security and customer affordability), there are three overall policy approaches. “Policy option 1” is about setting targets: pick a year by when net zero is to be achieved, and then do whatever is necessary to get there. “Policy option 2” is the other way around, looking at what can be afforded and then at what can be achieved with the available pot of money.

    There is a third set of more extreme options of stopping oil and gas now, or just assuming that science and technology will eventually solve the problem. Both are dangerous.

    What is now needed is a rational debate and honesty. Politicians need to engage in an open conversation with citizens and to work out how to maximise the benefits from what can be afforded, by making hard choices between the options.

    • 15 min
    Network Rail, Royal Mail, and Thames Water - three failing utilities

    Network Rail, Royal Mail, and Thames Water - three failing utilities

    Network Rail, Royal Mail, and Thames Water are all examples of serious failure, with major economic and social consequences. None has lived up to the ambitions of privatisation, nor are they world-leading examples of efficient management or in good shape to deal with the challenges in their sectors. They demonstrate what has gone wrong with the implementation of privatisation. And they are not the only ones – other companies across the utilities sector have also poorly maintained their assets.

    These utility failures have come at a huge cost. If productivity is to be improved, we can no longer afford to have continuing failed companies in the core utilities. The sustainable economy needs infrastructure that is well-maintained, properly financed and accessible to all. No more sticking plaster; we need a rebase now.

    • 11 min
    Territorial carbon emissions don’t tell the full story – the cases of Grangemouth and DRAX

    Territorial carbon emissions don’t tell the full story – the cases of Grangemouth and DRAX

    Our politicians may claim that the UK is on its way to net zero electricity, but the potential closure of the Grangemouth oil refinery provides an illustration of why the seemingly good numbers are not quite what they appear. Closing Grangemouth would bring down UK carbon emissions, but this just means a shift in the numbers from territorial to overseas production. To tackle the UK’s carbon emissions, Labour would also prefer to shut down oil and gas production in the North Sea and import it instead. Closing down large energy-intensive plants and oil and gas production in the UK will not make a big impact on global carbon emissions – it could even make it worse.

    The further big anomaly in territorial emissions measurement is the Drax power station. Its 12m tonnes of emissions per year are not counted in the UK’s numbers; yet the emissions are in our territory and wood pellet burning is a very questionable approach to tackling climate change.

    With a focus on carbon consumption – our carbon footprint – the story changes. A carbon tax on all the goods we buy, if applied at the border, would make a substantial difference when it comes to tackling carbon emissions. There are tentative steps at the EU level (and separately in the UK) to introduce such a tax. While this would take us a lot further forward, it would also result in UK consumers having to pay for the true carbon cost of goods and services, and hence live within our environmental means, as spelt out in my new book Legacy: How to build the sustainable economy. ( https://shorturl.at/fTW57 ) In particular, there could be a really big impact on the cost of electric vehicles, due to the emissions caused by their manufacturing, including the mining and refining of all the minerals and rare earths that go into them.

    Closing Grangemouth (and British Steel) is not a “get out of jail” card. Our responsibility to stop causing climate change needs us to take responsibility for our carbon consumption, not our carbon production.

    • 11 min

Customer Reviews

4.9 out of 5
11 Ratings

11 Ratings

Mike Mellor ,

Clear & informative

These podcasts are a welcome insight into the economics of our struggle to achieve net zero. They provide an equally accessible update to his book Net Zero.

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