The rising cost of energy is a national emergency. Last year, British households collectively spent around £30bn on their energy bills. Next year, that bill is expected to be in the region of £170bn. Those sums do not account for the higher energy costs that will be faced elsewhere in the economy, by businesses, hospitals and schools. It would be a colossal economic shock that would cause untold economic hardship and homelessness and people dying of conditions related to being cold.
Last week, Ofgem announced the energy price cap would rise to an average of £3,549 in five weeks’ time. This is almost triple what it was a year ago, leaving people facing average energy bills of £500 a month and more. Experts have predicted this will further increase to £700 a month in January. These kinds of sums will hurt the least affluent the most: low-income families with young children, pensioners living in poverty, people with disabilities. But only a slim minority of households are meaningfully insulated from a financial shock of this order. It is a crisis on the scale of the turmoil of 2008, which required a £137bn up front bailout to prevent banks collapsing and people’s savings evaporating, and of the economic impact of the pandemic, which required £70bn of furlough support to be paid to 11.7 million employees.
Yet the only response of the Conservative government has been silence. Our lame-duck prime minister, Boris Johnson, would not stand down until the summer was over but has spent his last weeks in office holidaying abroad, while former prime ministers and experts pleaded for an emergency package to be swiftly developed and announced. Greg Hands, the energy minister, was abroad on the day that Ofgem, the energy regulator, made its announcement. The government offered no minister to tour the broadcast studios to reassure the public that the crisis is in hand. The party’s two candidates to be the next prime minister have been more focused on tearing chunks out of each other in an overly long and increasingly bitter contest than on cooperating to develop a plan that would be implemented by whoever wins.
It is unforgivable to have a group of Conservative politicians in government who care so little for the country and who have so little respect for the people who live in it that they think it acceptable to neglect their responsibilities in this way. Neither Liz Truss nor Rishi Sunak has grappled with the crisis they would inherit as prime minister. Truss has promised tens of billions of tax cuts that will do precisely nothing to help the hardest-up cope and will deliver the most support to the wealthiest households who are the ones who can get by.
She has preposterously said she was not in favour of “handouts”; the equivalent of saying she would have been happy to let the banks collapse in 2008 or for people to have become destitute as a result of being laid off during the lockdowns of 2020. That she is almost certainly likely to be the next prime minister is a disgraceful indicator of the state of the Conservative party. Sunak has at least indicated he would target support at the least well off, but has said nothing that shows he understands the scale of what is needed.
The size of the energy price rises is such that measures targeted through the benefit system can no longer be sufficient, because they would miss too many households for whom extra support is vital. It requires an extraordinary response. Labour has put forward one such proposal: to cap energy bills at their current rates, at a cost of around £30bn over six months or £60bn over a year, partly funded through an increased windfall tax on oil and gas producers.
There are other ways of delivering this support, such as bringing in a new social energy tariff that cuts bills for all but the wealthiest households or at least taxing back some of the costs of this from the richest 10% or 20% of households. But Keir Starmer has understood what is needed in a way that his Conservative counterparts in government have not.
The immediate cause of this crisis is Vladimir Putin’s campaign of terror in Ukraine. He is trying to hold the world hostage by limiting access to Russian gas. There is no choice but to collectively pay the price. But Conservative prime ministers have taken bad decisions over the last decade that have left the UK more exposed to this crisis than it otherwise might have been. David Cameron scrapped subsidies for solar power, energy efficiency schemes and onshore wind, making the Britain more reliant on fossil fuels. The government has allowed the UK’s gas storage facilities to close, so that we now have capacity to store just 2% of annual demand.
Every day that passes without ministers stepping up to announce an emergency rescue package is a day that more people have to live sick with worry, not knowing how they will make it through the winter. Businesses that have been left damaged by the pandemic have no certainty about whether they will be able to survive the next few months. It is a monumental and unconscionable failure by the governing class. Sunak and Truss cannot leave it any longer before announcing either joint or separate emergency packages that they would implement should they find themselves in Downing Street.
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