THE numbers on the energy crisis are getting bigger, the words bleaker and the national mood darker.
After the latest dire prediction that the energy cap could hit £5,000 by April, Ofgem, the industry regulator, reassuringly intervened, saying, given wholesale market volatility, no forecast for 2023 could be robust. “We cannot stop others from making predictions but we would ask that extreme caution is applied to any predictions for the price cap in January or beyond.”
Of course, the numbers are already bad. Industry experts predict the October price cap could rise to more than £3,500; in April, it was £1,971.
Martin Lewis, the indefatigable consumer champion, described soaring energy bills as a “national crisis” and said millions of households, facing a “financial emergency,” would simply not be able to pay their bills.
A Uswitch survey suggested families were already getting into mounting debt with energy suppliers even before the price cap was lifted. It estimated 6m UK homes collectively owed £1.3bn to energy firms; triple a year ago. Average debt is £206, up from £188 in April.
Enter stage left Gordon Brown, the man who famously told us how he had “saved the world” after the 2008 financial crisis.
The ex-PM said the price cap should be cancelled and ministers should negotiate new lower prices with the energy companies. He even suggested firms, which couldn’t offer lower bills, should be temporarily brought into public ownership.
He has bemoaned the “vacuum” at the heart of Government and called on Boris Johnson, Nadhim Zahawi, Rishi Sunak and Liz Truss to hold an emergency summit to agree a way forward. Yet by the day, the two Tory rivals are drifting further apart.
Earlier this year, Sunak announced a £15bn package of help with £400 for everyone, rising to £1,200 for the most vulnerable. He plans to cut VAT, saving consumers another £200 from January.
This week, the ex-Chancellor said he felt a “moral responsibility” to provide extra help, particularly to the less well-off. “That is the right priority,” he declared.
Perhaps the best route to do this would be through the benefits system or a social tariff, so that those who have little would pay a much-discounted rate for their energy. The Government would pick up the difference.
Sunak derided Truss’s “starry-eyed boosterism” of swift tax cuts, arguing reversing the National Insurance rise would only benefit someone working full time on the national living wage by less than £60.
“These tax cuts simply won’t touch the sides,” declared the Yorkshire MP. “We need clear-eyed realism…That means bolder action to protect people from the worst of the winter.”
For her part, the Foreign Secretary told a red-wall constituency in Manchester: “If the only answer to everything is to whack up taxes and give out more benefits, then the country is going to run into trouble. We are predicted to have a recession. It is important we grow the economy.”
Having pejoratively dismissed giving people “handouts,” she then hinted to her audience she might do just that, saying she would “do everything I can to support working families who work hard and do the right thing,” stressing her Chancellor would look at the “issue in the round and sort it out”.
Yet, without further measures, Truss’s plan, at present, resembles a sticking plaster. The lowest paid don’t pay tax nor do those on welfare.
Suspending the green levy and reversing the NICs hike would save people roughly £400 a year. Together with the already announced help, it would mean most households would get £800 and the most vulnerable £1,600. But by January, energy bills could be north of £4,000.
Yesterday, Boris Johnson unexpectedly joined crisis talks with energy providers, urging them to “act in the national interest” to ease price pressures on consumers.
However, there were no concrete proposals and the PM made clear any “significant fiscal decisions” would be a matter for his successor. The SNP accused the Government of a “total abdication of leadership”.
After the meeting, Zahawi hinted at the possibility of a new windfall tax, noting how ministers were monitoring the “extraordinary profits” some companies were making. Truss, however, has made clear she opposes one.
Meantime, Nicola Sturgeon insisted the price cap rise should not go ahead, accusing the UK Government of being “missing in action” on the issue.
The FM warned that if London failed to take serious urgent action, then households would face deprivation and suffering. She added: “We’re going to see undoubtedly loss of life.”
And all the time the blue-on-blue poison is bubbling away, corroding the Conservative brand.
A Sunak spokesman was scathing about Truss’s approach, dismissing her “empty words about ‘doing all you can,’” and saying she had twice “made a serious moral and political misjudgement on a policy affecting millions of people,” mistakes that could cost the Conservatives the next election.
A Truss campaign spokesman hit back: “Rishi Sunak wouldn’t know how people benefit from a tax cut because he has never cut a tax in his life. People didn’t vote for the Conservative Party to be subjected to old-fashioned Gordon Brown-style politics of envy.”
With friends like these.
Last night in the spa town of Cheltenham, there was another opportunity for Sunak and Truss to put on an unappetising display of acrimony and division, trying to convince the Tory faithful each was more Thatcherite than the other.
In his political diaries, David Laws, the former Liberal Democrat minister, recalls his first meeting with Truss, saying she appeared “mind-bogglingly ambitious” and full of beans like a “young Margaret Thatcher on speed”. What he meant was, she would either become PM or blow up in the attempt.
Thatcher on speed. Quite a thought.
Whoever does emulate the Iron Lady and win the Conservative crown on September 5 will need to come up with a clear, well-considered plan of swift action, directing help to those who most need it. The country is depending on it and the next General Election will be decided on it.
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