Reducing costs or simply all gas!

Ed Miliband’s announcement that, if he is elected to Downing Street in 2015, his government will freeze energy prices for twenty months.  It was one of several statements over the past few days such as cancelling the ‘bedroom tax’ and compulsory purchase of unused land held by business that are indicative, some suggest, of a shift to the left by the Labour Party.  Today, we have had the predictable response from the energy companies, whose shares dropped drastically, that it could lead to the ‘lights going out’ and Miliband’s worrying tone that he would not ‘tolerate’ any obstruction from the energy industry.  The critical question is whether the Labour Party wants to not simply rein in what it sees as the worst excesses of the free market or whether it’s a case of back to the future, what one former Labour minister says marks a return to ‘tribal socialism’.One of the country's biggest investors - Neil Woodford of Invesco Perpetual - today called Labour's plan ‘economic vandalism..insane’ and warned that ‘the lights will go off, the economy will shut down.’  While Lord Mandelson, a former business secretary, said that he believed that Labour had moved on from the days of having to choose ‘between state control and laissez-faire’. 

The strategy the current opposition has developed to counter the government—the question of people’s falling living standards—is high risk especially so far from the General Election.  With the economy at least in the early stages of recovery and with falling levels of unemployment, there is still ample scope for the Coalition to counter the strategy with some effect.  But has Labour hit the right tone with its pronouncement about energy prices?  Polling data suggests that people are very concerned by energy prices but offering people £120 (the estimated gain from an energy freeze per household) is, I suspect, too low to persuade sufficient people to change their vote to Labour for it to hit the 35 per cent of the vote they need to be the largest party in the next parliament.  The electorate is sufficiently sophisticated not to be bribed into accepting what could be a disastrous business decision.  Prices in energy, as elsewhere, are determined by the law of supply and demand not by government regulation and control.  The energy companies are, like the banks, easy targets for the opposition since many people believe, not without some justification, that they put profits before social justice. 

But in government, you have to work with both and punitive raids on profits, though they may have political justification, make little economic sense—they have the potential for weakening the economy and reduce business confidence and may well increase living standards not reduce them.  Controlled economies have never been particularly effective economies since government is rarely the right organisation to run the economy on a day-to-day basis.  Yes it should provide the framework for fiscal and economic strategy but running the economy is best left to business and we need to recognise that business will always put profit before social justice.  The proper balance between profits and social justice is the role of regulation and we certainly need to strengthen this in several branches of economic life.  What Ed Miliband did yesterday, though it appealed to the socialist tendencies of some in his party, was to lay down a strategy for electoral failure not electoral success.  This is not, as he would have it, ‘standing up for the British people’.

Sir George Arthur as Lieutenant-Governor

The fragile order of VDL concerned the British government especially as it planned to increase transportation to the Australian colonies.[1] After Bigge found that transportation was an ineffective deterrent, the British government removed the popular Sorell[2] and in 1824 appointed the strict disciplinarian Colonel George Arthur as lieutenant-governor, beginning the most important period of the penal colony’s history. Seeking to make transportation feared by British criminals, Arthur raised convict discipline to new levels and ensured that punishment was uniform and assured. The British government responded by increasing the annual average of convicts sent to VDL from about 800 between 1817 and 1827 to about 1,800 between 1828 and 1835; between 1830 and 1836 convicts formed on average 44 per cent of the population.[3] The increase in convicts and free settlers swelled the total population from 5,468 in 1820 to 24,279 by 1830. Using methods similar to Sorell’s, Arthur deployed the increasing number of convicts on a large programme of public works and assigned convicts to farmers throughout the island. By forcing convicts to work for long periods, Arthur hoped to break the habit of idleness associated with criminality and provide convicts with skills to earn a living on the end of their sentences. The combination of cheap labour, a sizable injection of British capital and a growing free settler population greatly stimulated the economy and further strengthened the power and wealth of the gentry and merchants.

Arthur imposed severe punishments and floggings on convicts who disobeyed his regulations and many were hung for committing serious crimes, but order was also encouraged by his offer of inducements, such as a ticket of leave and a pardon, to those who behaved correctly and showed signs of reformation.[4] A ticket of leave was a license given to convicts if well behaved for four, six, or eight years depending on the length of their sentence. It allowed them to earn wages and live independently while serving the remainder of their sentences. The convicts remained under surveillance and the ticket could be rescinded for bad behaviour. A pardon remitted part or a convict’s entire sentence. A conditional pardon required a convict to remain in the colony, while an absolute pardon made no such requirement. Appealing to the self-interest of convicts was a central principle of Arthur’s policy of transportation

Colonists praised Arthur for restoring order by suppressing bush-ranging and the Aborigines and by enforcing a rigid system of convict discipline. But the relationship between some colonists and Arthur was strained. Arthur wanted to dominate colonists, not bow to their demands, to centralise power, not disperse it, and to restrict liberty, not extend it. The institutions of government reflected his desires. In 1825, VDL secured administrative independence from NSW and was granted an Executive Council, a form of cabinet comprised of senior public servants and a Legislative Council, whose members included the executive councillors and some free settlers chosen by Arthur. Arthur, who initiated all legislation, expected the two Councils to approve his measures and they invariably did. Arthur also expected the Supreme Court, formed in 1824 with the arrival of John Pedder as chief justice, to uphold his autocratic rule, even where his powers might ‘trench upon the privileges or conveniences of the free.’[5] By holding a seat on the Executive Council until 1836 and on the Legislative Council, Pedder subordinated the judicial arm of government to the executive and destroyed confidence in his impartiality.[6]

Arthur used his power to initiate new legislation ‘sparingly’ when it became the only way of ‘varying the community instincts and activities’ that frustrated his policies.[7] In ten years under Arthur (1826 to 1836), eighty-eight statutes were passed compared with one hundred and thirty-six in six years under his successor Sir John Franklin.[8] Arthur’s statute law vested ‘executive powers in himself and those responsible to him; providing administrative directions to enable his policies to be implemented without too much statutory regulation.’ He argued against the notion that no colonial laws should be implemented unless they were ‘adapted to the spirit of the British Constitution.’[9] Those who ‘knowingly’ emigrated to a convict colony, which was in effect ‘an immense Gaol or Penitentiary,’ should not expect ‘to retain every immunity and privilege’ they enjoyed in England and should ‘abide cheerfully by the rules and customs of the Prison.’ There could be

...no happiness nor prosperity without personal security,’ and this could only be secured by ‘severe discipline’.[10]

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[1] Boyce, James, Van Diemen’s Land, (Black Inc.), 2008, pp. 145-212 provides the most recent discussion of Arthur’s rule.

[2] Sorell’s removal had more to do with his relationship with Mrs Kent, whom he lived with in Government House than his governance of VDL. He was negligent in his family obligations and his failure to recognise the social conventions was a deliberate choice. For this he was apparently prepared to pay. He damaged the official career to which he was certainly dedicated, but the majority of the influential free Tasmanian colonists seemed to have overlooked unconventional conduct or impropriety and saw Sorell as a fair and effective governor.

[3] Ibid, Shaw A.G.L., Convicts and Colonies, pp. 365-67; ibid, Forsyth, W.D., Governor Arthur’s Convict System, p. 150; ibid, Hartwell, R.M., The Economic Development of Van Diemen’s Land, 1820-1850, p. 68.

[4] Arthur, George, Defence of Transportation, in Reply to the Remarks of the Archbishop of Dublin in His Second Letter to Earl Grey, (Gowie), 1835, pp. 48, 96-100; ibid, Shaw A.G.L., Convicts and Colonies, pp. 217-48; Davis, R.P., The Tasmanian Gallows: A Study of Capital Punishment, (Cat and Fiddle Press), 1974, pp. 13-33.

[5] Colonial Office (CO) 280, Arthur to Hanley, 4 April 1834.

[6] For a sympathetic view of Pedder, see Bennett, J.M., Sir John Pedder: First Chief Justice, (University of Tasmania), 1977. See also, Howell, P.A., ‘Pedder, Sir John Lewes (1793-1859)’, ADB, Vol. 2, pp. 319-320.

[7] Ibid, Castles, A.C., ‘The Vandiemonian Spirit and the Law’, pp. 114, 116 n. 53

[8] The Public General Acts of Tasmania 1826-1936, Vol. 7, (Butterworth), 1936-1939, pp. 221-228.

[9] CO 280, Arthur to Hanley, 4 April 1834.

[10] CO 280, Arthur to Hanley, 4 April 1834, emphasis in original.