Cold comfort

Amid the shock and turmoil of what has followed it’s easy to neglect, if certainly not forget, the impact of government action in regard to the issue Liz Truss considered most important to tackle when taking over as Prime Minister – the soaring cost of energy and the effect it continues to have on millions of householders. As a result of the changes made, and in simple cash terms, the home energy outlook over the coming winter months remains bleak, but for many not as bleak as it might have been. The Ofgem price cap, which was due to rise above £3,500 on October 1, has been axed and replaced with a two-year “energy price guarantee”. Under the scheme, a “typical” UK household will pay no more than £2,500 a year on bills for two years, starting from the beginning of this month. On top of this, all bill payers will still receive the previously announced £400 discount this winter. There’s also £650 in total for benefits claimants, £300 for pensioners and £150 for disabled people, but none of these payments are guaranteed for winter 2023/24. For some, the energy bills could still be higher, as the £2,500 figure is not a hard cap on all bills but on “the average bill”. Those living in detached, old or inefficient houses will probably have to pay more than £2,500 over the year. All in all, although the overall picture is brighter than it would have been, it’s worth remembering that the average bill last winter was only £1,277 – around half the new “energy price guarantee” figure, so many will continue to struggle.

How will all this be paid for? Mainly through government borrowing. Analysts say that could reach up to £150bn, although the government is refusing to put a figure on it. The new price guarantee also includes the removal of green levies for two years, and this is one of the areas that has met with fierce criticism from environmentalists and opposition figures. Truss’s decision to make climate change sceptic Jacob Rees-Mogg her new energy secretary has gone down like a lead balloon in many quarters. Not only has Rees Moog previously claimed that there is little point in tackling climate change as we won’t see the effects of doing so for more than a hundred years, he’s also lifted the ban on fracking, which he says will, “bring us cheaper energy”. There is, of course, no guarantee of that, and there remain serious concerns over the safety of fracking. To round off the return to the energy policy past, the government is handing out hundreds of new North Sea oil and gas exploration licenses in a further effort to boost domestic production. But this will not help the short-term crisis as it typically takes between five and 10 years from initial exploration until oil and gas are produced. Meanwhile, Liz Truss steadfastly refuses to impose further windfall taxes on those multi-billion making gas and oil giants.