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Every fewGYour browser does not support the element. decades the American government declares war on a noun, and the British government meekly follows along. In the 1970s it was Richard Nixon’s war on drugs, which shaped British drug policy for a generation. In the 2000s it was George W. Bush’s war on terror, which the British government keenly joined. Now another war has come along: the “war on prices”.The term was popularised by Ryan Bourne, an economist at the Cato Institute, a free-market think-tank. It explained how America’s politicians had come to see prices as something to be fought rather than a vital part of a market economy. Like its forebears, the has caught on across the Atlantic. Like an inept general, the British state has intervened when it should have steered clear; where action was necessary, it has often blundered.The British war on prices started with a skirmish. In 2013 Ed Miliband, then the leader of the opposition Labour Party, argued for a cap on energy bills. What was once dismissed as a hopelessly left-wing idea became policy in 2017 under the Conservative government of Theresa May. Four governments later, it is still in place. Each quarter Ofgem, the regulator of Britain’s privatised energy market, decides how much a firm can charge its customers.New fronts in the war keep opening. If the state can set energy prices, why not fiddle in the ? A renter’s bill designed to mitigate the casual humiliation of tenancy in England—landlords must now remove mould —has morphed into the introduction of a soft version of rent control. The removal of no-fault evictions means tenants can be more gung-ho about challenging rent rises. A tribunal of lawyers and experts will decide the “market rate” (mainly by firing up Zoopla, an online portal). This will be a one-way bet: a tenant will never have to pay more than the initial offer. Likewise, flat-hunters will be forbidden from going above the advertised asking-price. In the war on prices, “market prices” are too vital to be left to the market.At times, this is a dirty war. British politics has taken a scatological turn, in which leaders of a 7 country spend a surprisingly large amount of time discussing sewage. Again, inept pricing is to blame. Since privatisation in 1989, Ofwat, the water regulator, has focused on low prices rather than on compelling higher investment from private water companies. The result is waterways that are less clean than they might be. Worse, thanks to stricter rules on measuring sewage spills, voters in England now know exactly how bad things are (there were 464,056 spills in 2023). Faced with a choice of poo in the rivers or price rises, “neither!” is the war-cry of British voters.The water industry is not the only one to suffer from the British habit of marketising a service that struggles to function as a market. Universities are another victim. Tuition fees were capped at £9,000 ($11,725) in 2012, in the expectation that some universities would charge less to attract students. Instead, practically all universities—from Cumbria to Cambridge—charged the highest amount possible. The government then refused to allow price rises (other than an increase of £250 in 2017, seven years and one inflation shock ago). Many universities are now broke. Labour is considering allowing fees to rise to £10,500 by 2029. It is not much of a peace offering.What happens if the price of something is prevented from rising? Look beneath your feet. In Britain it is common to see paving slabs or intricate brickwork spoiled by streaks of tarmac left behind by utility companies. “Street scars”, as they have been dubbed by Create Streets, a design consultancy, are a consequence of the war on prices. According to a law passed in 1991, a company must pay up to £2,500 if it leaves a street in a state. What was once a stiff price is now spare change. Every year it is a little bit cheaper to leave Britain’s public realm resembling a battlefield.The war on prices was, for a time, a phoney war rather than truly damaging one. Sadiq Khan, the mayor of London, made a show of freezing bus and Tube fares. Keeping fares flat in an era of low inflation and low wage growth was a cheap sop to voters. But in an era of sticky inflation and healthier wage growth, the fighting is expensive. Between 2016 and 2024 bus fares in London rose by 17% to £1.75, with any rises smuggled through between election years. In contrast, the starting salary of a London bus driver rose by 43% to £33,000. London’s transport network is cash-strapped and the war on prices is, in part, to blame.Surrender in the war on prices is not necessary. At times the British state is a model of Hayekian rationality when it comes to prices. It is, for instance, happy to put a price on life. The National Institute for Health and Care Excellence, a regulator, is admirably clear that if a treatment costs more than £20,000-30,000 per quality-adjusted life year, it is generally not available on the National Health Service. This is the necessary sociopathy of the state, whose fundamental duties often boil down to who dies and how.Prices are sometimes deployed for cuddly but complex goals. Britain is a pioneer when it comes to “biodiversity net gain” credits, which see developers pay from £42,000 for disturbing heathland to £650,000 for ruining a peat lake. For all its flaws (what the right price for a bog?) this is better than the previous system, which priced these habitats at either zero or infinity, with building being simply banned. It is in less knotty areas—such as tuition fees or bus prices—where the war does most needless damage.But there is hope there, too. London was the first major city to introduce a congestion zone; it was also the first to introduce an ultra-low emissions zone, sticking with it even when masked vigilantes started chopping down enforcement cameras. Many battles have been lost. Peace in the war on prices is still possible.
