Tutor2u Year 13 Student Competition Winner!

After reading many fabulous entries to the competition in the Autumn 2023 Economics Update Magazine, we are delighted to announce that Natalie Cooper from George Watson's College is the overall Year 13 winner. Natalie's thought-provoking piece on the theme of "the biggest economic problem that we face, and a possible solution" is presented below.

The Need for Nationalisation of the Energy Sector

The world has changed and not for the better. Recent global events have shattered the dream of world globalisation, where the coming together of economies, cultures, and populations was supposed to benefit all of mankind. Nations have been forced to become more inward looking to try and protect themselves, and the failure to control our national infrastructure, has led to our reliance on other states for energy. This has left us vulnerable to world events and surging energy prices. Moreover, when Margaret Thatcher privatised the energy sector in the 1980’s, the country was promised lower prices, more efficient industry and extra investment due to market competition. The capitalist dream at work. Forty years on and in a changed world, this so-called “capitalist dream” has instead resulted in under investment, loss of expertise, and more expensive energy, at the same time lining the pockets of the energy companies. The market is not working as it should. It’s time to see if we can do things better. It’s time to nationalise our energy sector.

But what is the cost of doing so? A recent report estimated the cost of nationalising the ‘Big Five’ energy retailers to be £4.45bn. Since June 2021, the UK government has spent £2.7bn bailing out 28 energy companies that collapsed because they put short-term profits ahead of long-term stability. Additionally, the government pledged up to £6.5bn to help “Octopus Energy” take over the bust firm “Bulb Energy". We can see that the government is already spending large sums on the energy crisis without doing anything to fix the markets that are at the root of this problem. The nationalisation of energy would allow the government to fix this broken market and set prices fairly so that they do not soar astronomically, and lead to lower living standards for many as they currently do. Moreover, a nationalised energy sector would help provide energy security, so that Britain could be self-sufficient for its Gas and Oil supplies on the road to change to Net Zero. This would mean we would not need to rely on other nations and companies for this as we currently do. We could increase our storage facilities and refinery operations, creating thousands of jobs and allowing us to better manage the transition to more renewable energy. This would make the UK a more competitive economy.

The Labour Party has proposed a British Green Energy Company, funded by the public and run alongside private firms; a plan which focuses on producing renewable, clean energy, in such a way that “British people enjoy the returns”. Labour’s plan provides the fundamentals of a nationalised energy sector, but I believe that their plan should go further; creating a ‘Total British Energy Company’, so that all British energy is nationalised, encompassing Gas, Oil, Nuclear, Renewables and Electric. This would entail the phasing out of Oil and Gas, and the development of Nuclear, with new large stations there to provide backup for renewables when needed. If done properly, Britain would be in charge of its future energy needs, and a real drive to net zero could be achieved rather than beholden to private companies, focused on short term profits over long term stability of pricing and security.

The failure to act will see inequality worsen. Heather Parker, a single mother explains the daily difficulties she faces; “There are days when I don’t eat as much. I am hungry because the food goes to her first (her child). I have trouble sleeping at night. I’ll be up with anxiety thinking about making enough money because of the rise of energy bills.” Welcome to 21st century Britain where energy, which should be a human right, is now an ever increasing burden, and the poorest in society are facing the opportunity cost of “heat or eat.” This highlights the harsh reality that many are facing. Energy, which is a necessary good, and therefore faces inelastic demand, means that people have reduced purchasing power, so face lower living standards. The ongoing uncertainty around energy bills means that there is low consumer confidence, and in turn low spending in the economy. This reduces economic growth.

The energy crisis doesn’t end there. Across the country, businesses have been feeling the pressure. Continuing price rises, without support, has left many feeling hopeless, and out of options, other than to close their doors for good. Paul Minshull, owner of a cafe in Cheshire, has been forced to shut, fearful of rising energy bills: “We felt one increase [in energy bills] and that was a pinch enough as it is. We couldn’t sustain the next ones.” This shows that businesses are either forced to close, or fearful of their future. This causes a lack of investment into machinery, and training. This has a negative impact on productivity across the country, and means that UK businesses are less competitive. Tina Mckenzie from the Federation of Small Businesses puts it succinctly when she says “Without help, we are facing a generation of lost businesses, jobs and potential.”

So we are faced with two choices; let the market continue to operate as now, with eye watering taxpayer bailouts to help some in society; or instead better use that money to nationalise the industry and set up a new British Energy company, one that would prove revolutionary to our country. Profits would be reinvested, prices lowered and controlled to reduce inequality. This new company could, importantly, support the green aims for our planet, ensuring our drive to net zero will be reached. It will also allow the country to be self-sufficient, in control, and not over-reliant on unfriendly world powers. Britain will be secure in itself, secure in its energy, and reaping the rewards that come with this.The cost of nationalisation will equate to no more than the government already finds themselves spending in an attempt to sort out the mess left behind by private giants. It becomes clear that nationalisation is needed to ensure a better livelihood for all Brits.

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