Who knew Theresa May was so anti free markets, happy to meddle where competition fails consumers? Now she’s caught the bug with the electricity and gas price cap, here’s my selection of the other markets she should be meddling in. We’d be keen to hear yours, too.
Petrol
The average UK price is now 116p for unleaded, according to Petrolprices.com. The cheapest supermarket forecourts are charging just 110.7p. But if you’re on the M1 and pull into Newport Pagnell services, the granddaddy of Britain’s motorway service stations (it opened in 1959), you’ll be charged 138p – making it almost certainly the most expensive petrol in the country. That means you pay an extra £13 if you fill up there compared to a nearby Asda or Morrisons forecourt. Campaigners against rip-off petrol prices managed to get service stations to publicise their prices on motorway boards situated before slip roads, but this seems to have had no noticeable impact on pricing. It’s a clear case of market failure, so ripe for a price cap.
Trains
In Switzerland you can buy an annual pass that gives unlimited usage of the country’s entire network at any time capped at 3,860 Swiss francs, or £2,970 a year. It even has a monthly pass for £262. Regular daily commuters into Zurich, Geneva and Bern never have to pay more than £3,000 a year for their travel costs. Compare that to the £5,156 for a season ticket from Tunbridge Wells to London, including a tube pass. Or the £4,500 (including tube) whipped off travellers from Harlow, Essex, into London – just 27 miles – which, per mile, is the most expensive commuting route in Britain.
Ah, but Switzerland’s a weeny little country and can’t be compared to England, you might argue. Except that at 41,285 km2 it’s much larger than the south-east of England, so that rail pass goes much further, and its 8.3 million population is not massively lower, either. What’s more, average incomes in Switzerland are far superior, making its annual pass fantastically affordable compared to the punitive fares here.
So, Mrs May, how about capping regional UK season tickets at £3,000? The average is actually £2,493, so a £3,000 cap shouldn’t unduly hurt the rail operators. And given that most season ticket holders live in the shires, this might be a popular policy.
Rents
Property is the most rigged market in Britain, with the government already intervening in every corner of the market – from where and what you can build, to how it is built. Yet, weirdly, market fundamentalists scream blue murder should you even mention rent control. Over in Germany, not exactly a failing economy, rent increases within a tenancy are limited to movements in specified indices.
In the US, the personification of free-market capitalism, many cities have rent boards controlling local landlords. In San Francisco they can, this year, raise rents by only 2.2%. Last year it was 1.6%. In 2010 it was 0.1%. Of course, landlords tell you that rent controls result in dereliction and a lack of investment, as well hurt local economies. Is that the picture of San Francisco that comes to mind? A similar cap in London would have prevented the appalling situation where young adults are shelling out northwards of 70% of their take-home pay to find a bed.
Leasehold
A once relatively minor issue that has grown colossally in recent years – with out-of-control ground rents, management service charges and absurd bills for lease extensions. Ground rents are a medieval tithe on working people paid to the landed classes. They serve no purpose. A cap of £5 a year would kill the grubby trade overnight. Similar caps on management charges (a maximum per-square-foot levy?) would also be hugely welcome.
That’s my list of price caps. What are yours?
