For many months, everyone in the government knew that Friday was the day to replenish the energy, and at 7 in the morning the bad news fell. Phones are pinging as the nation wakes up to Ofgem’s confirmation that average gas and electricity bills will rise by an alarming 80%.
Millions of people are unable to cope, charities say. Even those on low or middle incomes with some savings will see it completely wiped out. This is a full-blown national crisis, even if long predicted.
Consumer champion Martin Lewis has been going around central London giving breathless interview after breathless interview, starting with BBC Radio 4 now program at 7:30 am. Lewis appeared on 11 separate outlets before 2pm, angering the government’s failure to act on his warnings, first issued in March.
But while Lewis was everywhere, and Labour’s shadow ministers assembled unopposed, the government was nowhere. Where, news producers asked, was energy minister Greg Hands? Or any minister of the crown? Prime Minister Boris Johnson, back from his second summer vacation, or the chancellor for another week at least, Nadhim Zahawi?
Hours earlier Kamot, whose responsibilities include retail energy markets, tweeted that it was a “great visit to Los Alamos National Laboratory, here in New Mexico,” where he held “useful discussions” about of nuclear fusion.
When asked, mid-morning, if Hands was already at his desk, officials at the Department of Business, Energy and Industrial Strategy seemed at first not to know. Then they said he was traveling to Indonesia for a G20 meeting. This is despite the fact that he was found at dawn in his departmental office between flights, clearly not having time to entertain any media bids.
In the absence of the government, the Joseph Rowntree Foundation (JRF) released its own analysis showing that energy bills exceed the income of many people to the point where paying them becomes a “fantasy”. This is, the JRF clarified, terrible.
“In all my years, I’ve never double-checked a piece of analysis like this one because it was shocking, it just felt wrong,” said Peter Matejic, the foundation’s chief analyst.
“It is impossible to imagine that a care worker or a shop assistant should have to work hard to find hundreds of pounds more to pay for their heating or that a person’s total income in a years lower than their energy bills. But that’s what these numbers suggest will happen unless significant additional steps are taken immediately.
The growing sense of national anxiety that Matejic shares with millions cannot, however, be addressed or appeased for some time by whoever is running the country. There are still eight days left before the name of the next prime minister is announced. Then, once Liz Truss or Rishi Sunak are in No 10, the date for an emergency budget must be set, options discussed, and finally, choices made.
Friday morning’s events add to a growing sense that the six-week Tory leadership contest has not only left a void at the heart of power, but that it is happening a world away from reality. .
Not only has the search for a new Conservative leader and PM left the government effectively suspended (initially the cabinet agreed not to make any major financial decisions until it was over, despite cost of living crisis) but the desire of candidates to play. what they believe are the views of the small Tory “selectorate”, make pragmatic policy formation impossible.
Truss, the hot favorite, has spent weeks locking himself into potentially inflationary tax cut commitments, while also promising to avoid “handouts” that everyone already knows are not avoid when those most in need get the help they need with their energy bills.
Both candidates also distanced themselves from green solutions to the energy crisis. In several hustings Truss won applause from Tory members by scrapping solar power.
But reality is at hand. Economists and MPs see the danger and say something has to give. Paul Johnson, director of the Institute for Fiscal Studies, said Truss had to back down from some of what he said.
He said: “He has to make a lot of handouts and he has committed to a lot of tax cuts. That will obviously be tens of billions of additional borrowing, which will pose risks for the long-term stability of public finances. and may be short-sighted for inflation or interest rates.
All governments are struggling to find solutions. But there is a sense of urgency in engagement with the EU that the UK lacks. European governments are scrambling to find ways to protect homes and businesses and the Czech Republic, which holds the EU’s rotating presidency, is weighing calling an emergency energy summit to discuss price caps on entire block.
Many countries have already taken action. Spain capped gas prices for a year, halved VAT on energy bills and reduced another tax on electricity to 0.5%, and taxed energy companies more, transferring money to those in need. who are customers.
Italy this month approved a new energy aid package worth €17bn, on top of the €35bn earmarked since January for the cost of living subsidies, and also aimed at taxing profit-making companies from higher energy prices. Low earners get a €200 extra payment.
France has forced state-owned electricity utility EDF to limit wholesale price increases to 4% for a year and cut its electricity consumption tax from €22.50 per megawatt hour to €1 for households and €0.50 for businesses. Additional individual assistance is decided upon.
Germany implemented several energy-saving measures last week: the temperature in public buildings will be limited to 19C from September and heating will be turned off in common areas such as corridors. The private sector is encouraged to follow suit.
In the last two days Truss has stated that he will provide help if needed, but it will require a U-turn before he becomes PM. David Gauke, the former Tory Treasury minister, said he believed he would have to announce some tax cuts to save face, but that it would not provide anywhere near enough help.
He actually thinks that after six weeks of saying one thing he should do another, which raises more questions about Tory leadership contests in times of crisis.
“He’s now trying to present what he’s going to do as very conservative, while I suspect that what he’s going to do is something that has a big interventionist, handout measure at its heart, which is not the kind of politics. want. he will but I don’t see that he has any choice.”
