OFGEM’s increase in the minimum price for energy has prompted demands for the Government to step in and subsidise our energy bills once again.
With our national debt at 100% of our national income, and another substantial overshoot in government borrowing during July, the Government is in no position to oblige.
Those demanding that the Government intervene appear to have forgotten the disaster that befell the Liz Truss premiership: Kwasi’s financial statement that included a raft of the most sensible measures to stimulate growth, was entirely undone by the simultaneous announcement that government would borrow in order to pay more than half of our energy bills. Such wanton generosity completely spooked the financial markets. The rest is history.
When Russia invaded Ukraine and energy prices spiked, I tried to persuade the Prime Minister that he should announce that, given that there was a war on, part of our national effort would be to bear the pain by reducing consumption.
The appropriate response to rising energy prices is for households to economise.
In the nineteen sixties, before anyone had heard of global warming (on the contrary, scientists were predicting a new ice age), I spend a lot of time with my grandparents in Scotland. They had no central heating. There were two fireplaces, one lit in the morning in the scullery, the other lit in the evening in the sitting room. They didn’t have a fridge, because they just didn’t need one. Perishables were stored in a cupboard in the ‘front room’ where a fire was only ever lit to celebrate Hogmanay.
The answer: they dressed appropriately, wearing layers of heavier and warmer clothes. I still possess a couple of my grandfather’s suits; they are so much heavier than modern ones.
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…And another thing, correspondents have asked me to revise my opinions set out in this column on 22nd July People’s Emergency Briefing given the ferocity of the wildfires we have experienced this summer.
On the contrary, substantial climate change has already occurred and it can’t be undone. Therefore, the first call on our resources must be to make ourselves more resilient by investing in our infrastructure to mitigate the climate impact. We need railways that don’t buckle, we need more firemen, we need better flood defences, ad infinitum.
The enormous costs of decarbonising our economy, especially our electricity grid, in a race to net zero, is something we simply cannot afford at present. We already lead the developed world in the extent to which we have cut our carbon emissions.
Given that we account for less than 1% of global emissions, further progress will have the most marginal impact on the climate.
In fact, it will make things marginally worse: Our current policy has driven up electricity prices to the extent that power-hungry enterprises cannot compete with overseas producers. Accordingly, they are closing and moving elsewhere. But we still need those products, be it cement, pharmaceuticals, steel, refined hydrocarbons and other manufactures, so we have to import them. In effect, we have exported our jobs along with higher emissions.
In the same way our government’s determination not to exploit the full potential of the North Sea means that we are importing oil and gas with higher emissions than domestic production. It’s madness.
I do believe that we need to reach net zero carbon emissions, but the current race to do so by 2050 is just the wrong priority.