Labour’s toxic medicine

This week, our rulers have left two more of their now-signature scratch marks on the walls of reality. One is perhaps bleakly funny, the second is really not.

On the lighter side, the Government is apparently proposing to make it illegal to work when it is too hot. This is apparently the latest advice from the Climate Change Committee, tasked with helping Britain hit its Net Zero goals, and would have as its objective making employers take more steps to keep their workplaces cool.

As is now par for the course in British policymaking, this is the result of a body tasked with pursuing a narrow mandate — in this case, climate targets — without any responsibility for balancing costs and benefits across the big picture. It’s the same dynamic that produces bat tunnels and fish discos, the insane post-Grenfell staircase laws, and my personal favourite (about which I have some work coming out at some point): Network Rail’s crusade against level crossings.

In this case, the rules are apparently modelled on similar laws in Spain. One thing you’ll note about Spain is that it is generally much hotter than the United Kingdom, and thus such laws both deliver a bigger benefit, to whatever extent they deliver worthwhile benefits, and make any investments made by employers more worthwhile.

(We should also note that like a lot of things, the temperature deemed “too hot to work” seems based not on any biological constant but instead what people are used to. In parts of the Middle East, such laws kick in at 50°C — and official thermometers spend a lot of time at 49.9°C.)

Such a policy is, it goes without saying, a bizarre preoccupation for a government which supposedly has as its highest priority a return to real economic growth. But as we’ve covered before and doubtless shall again, that isn’t really true. Labour ministers either have no real idea how economic growth is stimulated or at least are utterly unwilling to compromise their “Labour values” to deliver it.

But it is worth noting the irony that such a law would seem to have the intention of coercing employers into installing things like air conditioning, which is somewhat ironic since Britain’s climate change lobby are for the most part determined opponents of that unholy technology. A big part of the reason new-build homes in Britain have such tiny windows is that such things provide for passive cooling (by not letting any sunlight in). Even within the realm of climate change policy, then, we can’t manage a coherent agenda.

So much for the funny side. The entirely un-funny side is the news that the Government is reportedly leaning on supermarkets to cap the cost of basic foodstuffs. I don’t need to tell you why this is bad, surely. This is how shortages happen.

Opposition to supermarkets is generally one of the most stupid policy positions in modern British politics, at least from a consumer perspective. A farmer might well rue the fact that such a relentlessly competitive sector has driven down costs to the extent it has, but that it has driven them down is beyond dispute. British supermarkets provide an extraordinary range of goods at about the lowest cost to shoppers it is possible to deliver; competition is fierce, and their operating margins are razor-thin.

Fixing prices would, depending how the Government went about it, do one of two things. If it decided to make up the shortfall with subsidies in order to keep supply flowing, it would basically create the Grocery Triple Lock and ministers would have added yet another enormous reality-suspension line item to our overloaded public accounts.

That doesn’t seem to be the plan, however, which means we’re likely looking at option two: an uncompensated price freeze, and thus shortages. 

It is hardly difficult to believe that random activists think that supermarkets are “profiteering” from the Iran crisis. But ministers have no excuse for believing anything so silly — not least because they acknowledge the existence of the crisis! A globalised economy is in good times an excellent way of delivering a maximally-efficient economy, but that economy is vulnerable to supply chain shocks.

They’re just out of their depth — men and women with pretensions to leadership but entirely unfit to meet their historical moment

For supermarkets to actually be “profiteering”, they would need to be acting in concert to raise prices whilst costs in their supply chain remained constant. This would not only be a complete break from the way the sector has conducted itself to date, but that sort of racketeering would be a criminal conspiracy, and the people responsible for it could go to prison. If ministers think that is happening, they should task the Competition and Markets Authority to investigate it.

But they don’t. They’re just out of their depth — men and women with pretensions to leadership but entirely unfit to meet their historical moment. Our political class has also made a rod for its own back by indulging for so long in its war on the price mechanism. If the market shouldn’t be allowed to set the value of labour, or energy, or housing, then what exactly is the case for letting it set the price of food?

This is the spiral we’re in: the worse things get, the more our politicians attempt to suspend the symptoms by decree; the more they do this, the worse things get — but the more the public expects, and demands, the toxic medicine.