Good morning. The cost of living crisis already feels like one of the defining political problems of the era; by the winter, it will be a catastrophe. Anybody still doubting this analysis would have been forced to acknowledge its reality by confirmation on Friday that the new energy price cap will mean typical household energy bills will rise to £3,549 a year from October – and predictions that they will then go to £5,400 in January and more than £6,600 in April.
This morning, a Savanta ComRes poll finds that nearly one in four adults is planning to keep the heating off completely this winter – an alarming prospect when cold homes were responsible for 8,500 deaths in 2019.
Against that unprecedented situation are a set of political responses that feel to most analysts like they utterly fail to meet the gravity of the moment. On Friday, we heard from some of those facing the most severe impacts on what soaring energy bills will mean for them; today’s newsletter, with Carbon Brief’s senior policy editor Dr Simon Evans, will look at some of the solutions that have been proposed. Here are the headlines.
Five big stories
Health | Black and Asian people in England have to wait longer for a cancer diagnosis than white people, with some forced to wait an extra six weeks, according to a “disturbing” analysis of NHS waiting times by the University of Exeter and the Guardian.
Pakistan | Pakistan’s government has appealed for international help to tackle a flooding emergency that has killed more than 1,000 people and threatens to leave a third of the country – an area roughly the size of Britain – underwater.
Water | British people need to be “less squeamish” about drinking water derived from sewage, the boss of the Environment Agency has said. Sir James Bevan said that reprocessing water from sewage treatment was “perfectly safe” but “not something many people fancy”.
UK news | Police have urged anyone with information on the killing of nine-year-old Olivia Pratt-Korbel to come forward, saying “silence is not an option”. In a video released on social media, Merseyside police said anyone withholding information was “protecting the killers”.
Space travel | For the first time in 50 years, Nasa is planning to launch a rocket that can ferry humans to and from the moon on Monday. The Artemis I test mission will launch a Space Launch System (SLS) rocket atop an unmanned Orion spacecraft designed to ultimately carry up to six astronauts.
In depth: From price freezes to tax rises – do any of these ideas fit the bill?
When energy policy experts and economists think about an idea to soften the blow of the spike in energy prices, they think about three big questions: does it target help on those who need it most? Is it deliverable in the necessary timeframe? And what impact would it have on the big economic picture?
The urgency and severity of the coming crisis is so great that it makes solutions which get a tick on all three criteria very hard to find. But if helping the most vulnerable people in a hurry is the most pressing need, this chart, based on Resolution Foundation data, suggests that the political mainstream has either failed to point its guns in the right direction, failed to load them, or both.
Here are some of the choices on offer:
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Conservatives: Reverse national insurance rise, cancel green energy levy, ‘billions’ more to come
With Liz Truss now the prohibitive favourite to succeed Boris Johnson, it makes sense to focus on her proposals rather than Rishi Sunak’s slightly more generous plan. The best case that can be made for the proposals announced by Truss so far is that they are straightforward to execute, and that their impact will be felt straight away.
But critics argue that that impact is minimal and hopelessly distributed: an estimated 28% of the benefit of scrapping the national insurance rise would accrue to the top 5%, against 15% to the bottom 50%. Truss’s pledges so far add up to £92 a year for the poorest 10% of households. A VAT cut was also trailed in the Sunday Telegraph – but Sunak’s team argues that given VAT is not paid on basic items such as staple foods, that will do little to help those who need it most.
“What we’ve heard so far is a tiny amount relative to the increase in bills,” said Dr Simon Evans. “To put it in perspective, the total impact just of the increase to the cap coming in October is £45bn. She has offered about £5bn of help.”
Green levies, he notes, are more significant as a rightwing talking point than a meaningful reduction in bills: imported gas is responsible for 96% of the price increase so far. For more on that, read this piece Evans wrote for the Guardian last week.
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Labour: Freeze the energy price cap
Keir Starmer’s plan to keep the cap below £2,000 a year will have significantly more impact than Truss’s, costing about £30bn over six months, Labour estimates. That figure only begins to get at the cost, though: “My understanding is that they’ve announced a six month freeze because there’s no point in costing up a full year when gas markets are so volatile,” Evans said – and it’s hard to imagine the crisis abating within six months. A back of the envelope figure for a full year given current predicted price increases is £64bn.
Evans notes that while the proposals do not aggressively target the worst off, “even people relatively high up the income distribution are really going to be feeling the squeeze” – a point acknowledged by the chancellor, Nadhim Zahawi, over the weekend – and the blanket nature of the approach means it can easily be administered. “It’s challenging to design something truly progressive in the time available,” he added.
But it still appears expensive for a scheme which ultimately gives slightly more help to the richest households. In this piece, the Guardian’s economics editor, Larry Elliott, also argues that plans to part-fund the package by increasing windfall taxes on energy companies may not net the promised £8bn and might disincentivise investment.
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Scottish Power: Freeze energy bills for two years
The energy industry’s preferred scheme, set out by Scottish Power chief executive Keith Anderson last week, would see the government guarantee loans to energy companies to keep bills frozen. That would then be repaid by customers through increased bills for 10 to 20 years. Anderson estimates the cost of such a scheme at £100bn, but again, the volatility of the market means that it could change.
The proposals are of “the right sort of magnitude”, said Evans. “But there is a question about whether it’s best to pay for that via bills for a very long period rather than doing it off the government balance sheet.”
And, again, the industry proposals do not focus help on the worst off. Critics on the left see the scheme as a way to “bail out energy companies whose businesses have failed”, in the words of economist Richard Murphy. He argues that the plan would give a £100bn “bung” to companies which may go bust anyway if their business customers cannot afford their bills.
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Targeted help: Discounts for the worst off and tax rises
In this piece for the Observer, Torsten Bell, chief executive of the Resolution Foundation, argues that tax cuts, proposals to nationalise energy suppliers, and the Scottish Power proposals are all “distractions”. His think-tank argues in a policy paper that an effective medium-term solution is to give a 30% discount on energy bills for low-to-middle income households – a “social tariff”.
It suggests that such a plan would cost £15.4bn for a year and could be tapered, giving a 30% reduction to households where nobody earns over £25,000, plus a 12% reduction to those where nobody earns over £40,000. That would help an estimated 94% of the poorest half of the population.
Martin Lewis, of Money Saving Expert, has backed a similar plan, as have MPs on the business and energy select committee. For a deeper look at how social tariffs work, see this July piece by Rob Davies.
Such a scheme would be complicated to administer: energy suppliers do not have access to income data, so the government would have to share the information or run it itself. “I don’t know if that could be in place by Christmas,” said Evans. “And you need something immediate.”
Acknowledging that issue, Resolution also proposes “lowering energy prices for all, and recouping some of the cost … through an additional 1p on all rates of income tax”. That would ensure that better off households did not reap the benefits of an intervention without new layers of bureaucracy. That would be more expensive at a cost of £23bn for six months.
“There is a question about the political viability of that,” said Evans – and it seems far from any likely scenario under a Truss government. “But you do need something immediate and then a longer term solution.”
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The long-term: Energy efficiency, decoupling gas and electricity prices
Electricity prices are currently pegged to gas even if the majority in fact comes from other sources – meaning that some renewable firms are making a killing. But, says Evans, reforms in this area “are going to take a significant amount of time to work through”, with some experts expecting the necessary consultation and legislation to take five years.
There is also a huge question over the government’s failure to take action on home insulation: this winter, the least efficient homes in band F will have gas bills about twice as high as those in band A, and cost £151 more a month to heat than C-rated homes. “The government has failed to have a serious energy efficiency policy,” said Evans. “The best time to do that was a decade ago. The next best time is now.”
What else we’ve been reading
The title of sommelier is no longer confined to the world of wine: as Clare Finney explains in this entertaining piece, everything from chocolate to oysters now have their own pairing experts. Even Subway have got in on the act with a crisp sandwich specialist. Hannah J Davies, deputy editor, newsletters
What do a roll-up sun visor, a dog-poo bag dispenser and perennial kale have in common? They will all make your life slightly better, and therefore feature in Saturday magazine’s list of 31 tiny victories. Sam Wollaston uses his head torch for reading, biking, and finding his tent, FYI. Archie
Industry creators Mickey Down and Konrad Kay discuss the upcoming second series of their bingeable BBC/HBO banking drama, which – as Rachel Cooke rightly concludes – has more than a touch of Succession to its brooding set pieces. Hannah
As Rishi Sunak’s bid for the Tory leadership sputters towards what looks like an inevitable conclusion, Nesrine Malik reflects on the failures of a campaign in which all too often he appeared to be merely “reading from an Autocue in a well-cut suit”. Archie
The New York Times (£) has compiled years of “how to” tips in one place, from the potentially oblique (how to get someone out of a cult) to the arguably crucial (how to have fewer regrets). Hannah
Sport
Football | A Harry Kane double led Tottenham Hotspur to a 2-0 victory over Nottingham Forest. Kane also missed a penalty. West Ham beat Aston Villa 1-0 thanks to a Pablo Fornals goal in the 74th minute.
Formula One | Max Verstappen won the Belgian Grand Prix to open up a 93-point lead in the title race, with Sergio Pérez second and Carlos Sainz third. Lewis Hamilton dramatically crashed out on the opening lap and said he felt “grateful to still be alive”.
Football | Manchester United are poised to buy Antony after agreeing to pay Ajax €100m (£84m) for the Brazil forward, who is expected to sign a contract on Monday.
The front pages
The Guardian leads on this bank holiday Monday with “Revealed: black and Asian cancer patients wait longer for diagnosis”. The Times says “Half of Tory voters want energy to be nationalised”. “Hospitals hit by £5.5m-a-day bed blocking crisis” – that’s the Daily Mail, while the Mirror has “Schools and NHS bills emergency” saying health chiefs and head teachers face “brutal cuts” because of soaring energy costs. The i reports “Truss under pressure to offer energy help for all”. The Daily Telegraph says “PM:” – that’s Boris Johnson – “Don’t give up on green energy”. In the Express this morning: “Millions facing hardship with ‘end of cash in 5 years’”. Today’s Financial Times splash is “Policymakers warn of challenges in tackling new era of inflation”.
Today in Focus
Revisited: searching for the shadow man (part 2)
A genocide researcher investigating a 2013 atrocity committed in Syria creates an alternative online identity – the character of ‘Anna S’ – to entice a military commander to confess to war crimes. But how far can she push? And how long can Anna go on?
Cartoon of the day | Edith Pritchett
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The Upside
A bit of good news to remind you that the world’s not all bad
Buying secondhand clothes isn’t just an eco-friendly, budget-friendly way to shop – it could also bring a touch of celebrity glamour to your wardrobe. A growing number of famous faces are selling their unwanted items on sites like eBay and apps such as Depop, with many raising funds for good causes in the process. Among them are Harry Lambert, stylist to Harry Styles and Emma Corrin (pictured above), who has donated profits from his Depop sales to the LGBTQ+ charity Mermaids.
Sign up here for a weekly roundup of The Upside, sent to you every Sunday
Bored at work?
And finally, the Guardian’s crosswords to keep you entertained throughout the day – with plenty more on the Guardian’s Puzzles app for iOS and Android. Until tomorrow.
