Soviet-style production planning is back

24th May 2021

 

A few months ago, I heard a crazy idea that the Government were thinking about, wrote about it in my blog but didn’t seriously think a Conservative Government led by Boris Johnson would really go ahead with it. I was wrong.

It is still a crazy idea but yes, it seems a serious proposition, they’ve even called it (irony alert) “A Market Mechanism”. In fact, it is just the opposite, it is truly Soviet-style production planning.

I attended a recent presentation from BEIS on how to increase heat pump take up (to hit the 600,000 a year target set) and the market mechanism is to replace the RHI and Clean Homes Grant. So what is this mystery market mechanism? Well sit down, take a deep breath and I’ll explain.

The UK gas boiler industry is too successful for BEIS. Providing all those UK jobs in places like Hull, Preston, Derbyshire, and Worcester and keeping 23 million people warm and with plentiful hot water supplies. So here is their wizard plan.

They will place a legal obligation on the boiler manufacturers to make alternative products that compete with gas boilers. And, if they don’t sell the target level of these alternatives set by officials in Whitehall, then they will penalise the company. A similar “obligation” hangs over the energy suppliers now, and the penalty is harsh, a fixed percentage of revenues.

The bit the officials fail to grasp is that if the demand is there, products will be made. It doesn’t need a Whitehall commissar determining what the market looks like but that is what we will soon have unless wiser heads prevail.

Next time you watch a game of football, and the Blue team winning 3-0 starts kicking the ball into its own net, to put the Red team on the score sheet, you will know BEIS officials are now running the Premier League too.

Best wishes

Mike Foster, CEO