Martin Ellison's picture
Affiliation: 
University of Oxford
Credentials: 
Professor of economics

Voting history

Assisting Households Facing Rising Energy Costs

Question 3: Should a windfall tax be used to (fully or partially) finance support to households?

Answer:
Yes
Confidence level:
Confident
Comment:
The management of the UK War Loans offers evidence that we do not need to worry too much about the incentive effects of a windfall tax on energy companies. War Loans were taken out to fund the Great War at an interest rate of up to 5%. When interest rates fell to 2.5% in 1932, Neville Chamberlain announced that the government would exercise its right to call the loans, offering either cash or to continue the loan at 3.5%. Although unexpected, this did not reduce the appetite of investors to lend money to the government. The lesson is that a windfall tax is appropriate when there’s a problem big enough to threaten the stability of the whole economy.

Question 2: Which of the following is the best way to address the impact of rising energy costs on household finances?

Answer:
Conditional/targeted transfers
Confidence level:
Confident
Comment:
It’s a toss-up between conditional/targeted transfers and price caps based on energy use. Given the urgency of the situation, there’s a strong case for a speedy uplift in conditional and targeted transfers to the low-income households that are really squeezed by increases in energy prices. Price caps based on energy use have more appeal in the longer run, although there are better ways of redistributing income and wealth. Fixed-sum transfers to all households is a terrible policy.

Question 1: Overall, which of the following best characterises how the government’s proposed energy policies will leave the average UK household over the medium term:

Answer:
Substantially worse off
Confidence level:
Confident
Comment:
Energy is going to get more expensive in the medium term due to geo-political instabilities and climate change, and the country needs to adjust to that. Shockingly, the government’s energy policies offer no incentive for households and firms to reduce energy use. In the medium term this can only make the average UK household worse off. The government has its head in the sand, borrowing on the country’s behalf to protect energy companies whilst doing nothing to wean households and firms off energy.

Levelling Up Productivity Gaps in the UK

Question 2: Which policies could best help reduce regional productivity disparities?

Answer:
Public or subsidized investment in lagging communities
Confidence level:
Confident

Question 1: What is the primary factor driving regional productivity disparities in the UK?

Answer:
Place Fundamentals
Confidence level:
Confident

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