Desperately Trying To Halt The Energy Bills Crisis
March 12, 2022.
Chancellor Rishi Sunak Is In Talks With Tories Who Are Desperately Trying To Halt The Energy Bills Crisis. The chancellor has held meetings with multiple Conservative MPs this week where he heard their suggestions for how to further protect households from soaring energy prices, writes Adam Payne for Politics Home.
"He's done a lot of work this week talking to as many colleagues as possible," said one Tory backbencher among those who met with Rishi Sunak. "He chose to do that, it was him inviting us into his office. This wasn't just colleagues grabbing him." The fact that Sunak has been so keen to gauge the views of Conservative MPs points to a growing concern within the Treasury about the impact of rising energy prices on voters.
The growing global cost of gas, which is just one headache for ministers in a wider cost of living crisis. Last month Sunak admitted people would find it "incredibly tough" to pay their bills in the coming months, prompting the early announcement of a support package to help avert the crisis. Households will be given a £200 loan that will help discount their energy bills, to be repaid over five years, plus a £150 rebate on their council tax Digging heels in Despite pressure from Tories, it seems Sunak is currently reluctant to go much further. A government source told The Times this week that he is ‘highly unlikely’ to cut fuel duty in his forthcoming Budget on 23 March, and believes that last month’s announcement of the £9 billion energy support package is sufficient.
But in private, senior figures in government admit that those measures will no longer suffice, with Vladimir Putin's invasion of Ukraine driving up energy prices even more on the continent. "It’s inevitable that Rishi will have to redraw that package of support," one senior government source said. A minister PoliticsHome spoke to this week agreed that the Chancellor was likely to be pressured into announcing further help for households in the spring statement, which he will deliver in less than a fortnight's time.
Reliance on Russia The UK gets less than 4% of its gas from Russia, meaning unlike many of its EU allies it is not dependent on Russian supply. Kwarsi Kwarteng, the Secretary of State for Business, Energy and Industrial Strategy (BEIS), this week announced that the government would explore how to reduce this percentage share, in addition to phasing out Russian oil by the end of 2023. But as a senior BEIS figure said to PoliticsHome this week, while Russia's invasion of Ukraine will have little effect on UK gas supply, it will have a significant effect on UK gas prices.
The price cap, which sets out the maximum amount an energy company can charge a household in the UK, will rise to £2,000 next month — a decision taken before Russia declared war on its neighbour and the subsequent geopolitical fallout. But there are now industry warnings that the cap could rise further to £3,000 later in the year if, as expected, the cost of energy continues to increase.
Fear on the doorstep The Conservative MP who met with Sunak this week said the Chancellor "has got to make a significant move" because their constituents are terrified by what is happening to their bills. "I've been knocking on doors for years and you always get complaints about government policy but I've never seen the fear in peoples' eyes that I'm seeing at the moment, people are genuinely scared," he said. "Forget the politics. People are scared and I don't blame them. He has got to do something".
Another Conservative MP said the Treasury ought to expand the existing package by giving more support to the poorest households. This was among the measures BEIS is believed to be considering, according to Politico’s London Playbook. "I'm going to be paying substantially more for gas and electricity but I have a good salary and even if it is a hit, I can absorb it,” the MP added. “For those at the lower end, something's got to be done."
Crisis looms Martin Lewis, TV financial advisor and founder of Money Saving Expert, has warned "we are going to see a real increase in genuine poverty in this country" unless there is "genuine political intervention" to protect people from soaring energy prices. “We have a spring statement coming and I would urge the Chancellor, let's nip this in the bud,” he told BBC Radio 4 on Thursday. “Let's not have people starving or freezing."
Lewis said he was "slightly worried" that government figures would attempt to push the narrative that Putin's attack on Ukraine was solely to blame for soaring energy prices in the UK, meaning "we all need to make sacrifices," rather than rely on further help from the Treasury.
"What has happened in Ukraine has exacerbated the situation but the rises in energy, heating oil, water, council tax, broadband and mobiles, food, national insurance were all in place before Ukraine," he said.
People aren't prepared
A senior Conservative MP said they felt Boris Johnson and senior ministers had not been frank enough with the general public about what the conflict in Ukraine means for their cost of living. "We haven't really prepared people for what this means," they said.
"We need to be honest with people: there's a war in Europe and defeating Russia is going to result in some economic costs at home, and they're worth paying because the alternative is he [Putin] trundles into a NATO country and then we are at war."
Labour has accused the government of allowing the cost of living crisis to “spiral out of control since September”, and that the increase in National Insurance that will also come into effect in April will make things worse.
"People are worried about their energy bills,” a Labour spokesperson said. “The Conservatives should halt their National Insurance hike in April – and they must look again at Labour’s proposal for a one-off windfall tax on oil and gas producers to cut household energy bills by up to £600."
Energy overhaul The Prime Minister has said revising the country's energy mix – and becoming less dependent on Russian gas and oil – is a key priority in light of Putin's horrific invasion of Ukraine. He is set to lay out details of plans to achieve this imminently.
Johnson’s spokesperson indicated this week that the government would "look at all of our options", including lifting the ban on fracking, as part of efforts to have greater domestic sources of energy. Ministers are also expected to accelerate plans for more nuclear power.
However, reconfiguring where the UK gets its energy supplies is a long-term project, and does not address the growing pressures on household bills here and now. This is why there is a consensus is building in Westminster that Sunak will ultimately be forced to act, again.
© Adam Payne / PoliticsHome 2022
People often ask, when faced with the statement 'The government must do something', what is it a government can do in a free market economy.
It is a fair question. A free market economy means just that - free. Free to set its own prices, free to respond to demand, and of course, to what its users want. And all business have to make a profit - if they don't, they don't stay in business, at least not for long.
But there is a difference between making a profit - even a good one - and exploiting what people need; not merely want, but need. And what it costs to simply stay alive and have a home to live in, now borders on exploitation, or has even crossed that border. That applies especially to having a home and has done for decades. The cost of either buying or renting somewhere to live has indeed gone beyond the point of exploitation, with what is seen as easy money and lots of it, to be made by many in the housing industry; estate agents, property developers and others.
The cost of a home is always blamed on 'demand' by those involved but it is not. It is simply down to one thing and one only; greed.
Everybody needs a place to live - a secure, stable home in which to rest and play - and even work from as well. Increasing numbers of people either do not have such a home to start with, or cannot afford to buy one and are thus at the whim of greedy estate agents and landlords when renting. And equally huge numbers of renters routinely have their rights trampled on, feeling they dare not protest in case they face eviction. They live in fear.
A similar fear is now surfacing in increasing numbers of people regardless of whether they own or rent. All need to eat, and in winter, have heat. These are not luxuries; these are not disposable toys to be thrown away when done with; these are not mere desires.
A home, clothes, footwear, food and warmth are essentials.
All governments have duties to the citizens that (in a democracy) give them their well-paid jobs. The UK government is comprised of Members of Parliament (MPs) who receive their comfortable salaries because people pay their taxes. The same applies to local councillors. And people pay their taxes by law, not choice.
Two of those duties are to protect citizens from interference by others (in whatever form that may take) and the other is to ensure people have what they need to stay alive. So yes, the government must do something. It doesn't however, include imprisoning people at home or telling them what they can and cannot buy using health as the excuse.
It also does not include leaving people with the choice between starving to death or freezing to death. Successive UK governments have ignored the need for a reliable, UK-based source of energy and food supply for decades and we are now seeing the results.
And no, I don't have a quick, easy answer as to what needs to be done because there isn't one.
Solving all this is not simple or easy. But that is what we elect and pay our MPs and at local level, councillors and local government employees, for. To solve the hard problems and without petty, pointless political party posturing and point-scoring.
And if any MP, councillor or anybody else in an appropriate position doesn't like that, they they are still free - free to go and do something else.
© Kevan James 2022.