Brian Monteith: Pensions, power costs and making the switch

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Every Wednesday I tell the editor what I intend to write about by Thursday night – before it appears by Friday lunchtime.

By Monday the SNP’s bribe of a pensions bonanza to get Scots to vote Yes seemed unassailable as the lead topic – unless martians landed in Morningside or the Labour Party decided to go back to its failed economic policies of the 60s and 70s. (For younger readers let me tell you they were so bad we needed Thatcher to sort it out.)

Impetuously I sent over my plug “the SNP should retire” to flag up what I was going to write.

As we all know, a jeely piece always lands jam side down. By Tuesday afternoon the inevitable happened, the detached-from-reality leader of the Labour Party had indeed decided to go “forward into the past” and introduce price controls, starting with the price of gas and electricity. (Expect others to now follow).

The policy is wrong in so many ways that it cannot be ignored, but I shall keep my promise and discuss first why the SNP should indeed seek early retirement and leave alone what they clearly do not understand.

Alex Salmond and then Nicola Sturgeon (so there’s no shifting the blame on this one) have said that the increase in state pensionable age planned to rise to 67 from 2026 would not happen in an independent ­Scotland.

The SNP argues that as life expectancy of Scots is shorter, the pensionable age should start sooner.

But that is only one part of the equation. It’s called being economic with the truth. In a court, where you are expected to give “the truth, the whole truth and nothing but the truth” it would be tantamount to lying.

What the SNP forgot to mention was that Scotland has a larger proportion of pensioners than the rest of the UK. This means that although they are not expected to live as long there is still a larger bill that needs to be paid for – which in an independent Scotland would be funded by a correspondingly smaller workforce.

We need to remember (because the SNP does not want to remind you) that our pensions, when they come, are NOT paid for by our national insurance contributions or even our past taxes – they are paid for by the taxes of those working in the future once we have retired. The taxes that workers pay today go towards the pensions being paid out this week and next week. We cover the cost of our pension through current revenues – not some government investment or savings pot.

The cost to the Scottish economy of the SNP bribe has been calculated as an extra £6 billion per year.

That’s money we don’t yet have and is £6bn more than anyone has budgeted for – so it would have to be raised by extra taxation, more borrowing – or both.

To make matters worse, the Tory leader Ruth Davidson has discovered that the SNP’s calculations ignore what its own specialists have told the parliament about Scotland’s ageing population – it is getting older quicker than the SNP says. She is right; this bribe is “an extremely dirty trick to try and dupe the population into voting Yes.”

Now let me move on to Ed Miliband and that promise to freeze electricity and gas prices. . .

A price is a result of supply and demand. If you try to control prices there are predictable consequences that we can expect. The first is that if investment does not provide an attractive return the energy companies will move their investment in new generation to more lucrative markets elsewhere. Lights will go out in future years.

Companies working under a price ceiling will have no alternative but to maximise profits by closing their less economic plants – reducing the generation capacity in the UK. Lights will go out within a year of the freeze. The microwaves won’t work. You will need a clockwork radio.

Over the last six years I have worked in five foreign countries where they have energy price controls and I always endured power blackouts – I can assure you this is how Miliband’s Britain would be too.

As if this craven bribe is not bad enough – based on the hope that the British public misunderstands markets as badly as he does – Ed Miliband is the person responsible for the high energy prices.

It was under the watch of Miliband as Labour’s energy minister who passed the 2008 Climate Change Act that subsidises expensive power generation saw the highest increase in prices – that have slowed since he lost office.

The average costs of energy for a household in 2012 was £1189, including profit to the supplier of £49 – and £112 of Miliband’s green taxes.

Miliband now says energy prices are the problem but doesn’t explain they are his fault – and says he’s the man to fix it.

That would be like putting Vladimir Romanov in charge of the Scottish Premier League after he bust the Hearts.

Is Britain really that gullible? Have martians landed? Would the last person leaving the country switch the lights off?