Sunday, September 21, 2008

It's the ordinary folk who carry the can

"Taxpayers in Britain face up to 5p in the pound in extra taxes because of the credit crunch created by the banks, leading economists have warned," says The Sunday Times, bemoaning in its leader that, "It's the ordinary folk who carry the can."

Indeed they do and it was ever thus but, while the paper is rightly getting excited about this latest raid on our wallets, another one is around the corner which will cost us, potentially, even more.

We are, of course, referring to our favourite hobby-horse, the EU's emission trading scheme (ETS) which, with other levies and taxes, is set to add anything up to £15 billion a year to our bills (no one knows precisely how much – so this is a conservative estimate) – also, by some strange coincidence, equivalent to 5p in the pound in extra taxes, and that is likely to be only a start.

Worst still, this "tax" is regressive, which means those on lower incomes are hit proportionately harder than the wealthy.

That the vultures are gathering to feed off this new income stream is already evident from this piece, where the boss of the consultancy LECG, Chris Osborne, is exulting in the prospect of a new "dot-com boom".

That snouts are already in the trough is clear from our other piece and, in a shameless appeal to the greed dominating the financial markets, the Carbon Trust is advertising in the business press a "business opportunity worth £1.2 billion in the UK". Aimed at encouraging investment in "low carbon markets" and "creating new products" it directs readers to its website, where no end of money-making scams await those who join the "green-con boom".

Amazingly, the political classes seem to be totally unaware of what awaits us. This is perhaps indicated by a post in Conservative Home today which "reveals" the exclusive news that a senior frontbencher has told the site that, "as part of an ongoing review of economic policy, higher green taxation is very unlikely to feature in the next Conservative manifesto."

My comment on the site puts this in perspective, noting that unless the Conservatives are prepared to address the costs already in the pipeline - and in so doing confront existing and planned EU initiatives - a commitment to avoid further green taxes is of very little value. The damage is already done.

This leads one to the inevitable question, "can politicians be that ignorant?" Can they be so ignorant that they are apparently so heedless of what it to come that they can make statements as utterly facile and meaningless as appears on the Conservative Home site. This we have already answered - yes they can! – which makes Booker's column today a timely corrective.

In his piece, he picks up on some of our work and the connection between Lehman Brothers and the climate change industry, and between the company and those two great climate change evangelists, al Gore and James Hanson (pictured above).

What we have not yet fully explored, however (but, no doubt will) are the emerging plans to combine the UN's "clean development mechanism" with the EU's ETS, thus creating a truly global market in snake oil carbon credits, worth perhaps trillions of dollars once the US comes on board.

What drives this development is the growing realisation by European governments – and the EU commission – that the emissions reductions targets they have set themselves for 2020 and beyond are unachievable without massive damage to the economies of developed nations and, in particular, the need to force electricity generators to shut down their plants, leaving their customers cold and in the dark.

The net effect of such a development will be to extract the teeth from the ETS and related schemes, depriving it of its capability to drive down emissions, which was the supposed rationale of the scheme. All that will be left is a bloated financial market, trading in the ultimate snake oil product, carbon credits, for the enrichment of the few and the impoverishment of the many.

That Lehman Brothers – and before them Enron – were so keen on this scheme tells you all you need to know. It comes from the same stable as the securitisation packages of sub-prime mortgages, a financial empire built on foundations of sand.

Many people warned of the dangers of the "credit crunch", but some of those who are popping up now are exposed to accusations of being wise after the event. Yet, in the "green-con boom", the wiz-kids are preparing the ground for another financial bubble – a "climate change crunch" if you like - the consequences of which will be just as damaging as the present crisis.

And, as The Sunday Times so rightly observes, "It's the ordinary folk who carry the can." Booker, as he is so often, is being wise before the event. Can we please have some grown-up politicians to join him?