During the Summer Recess, I have been speaking constantly with Ministers about mitigating the worst effects of the cost of living crisis. I have also received a lot of correspondence from constituents who are rightly concerned about their rising bills. While no politician has a magic wand to solve what are essentially global supply chain problems, you may welcome a short statement on the current situation.
It is easy of course to blame the current Government – or any of the previous Conservative or Labour Governments – for the inflationary pressures that the UK is now facing but to suggest that these are solely due to the prevailing economic policy, perceived lack of an energy strategy or quantitative easing would be unfair and wrong. The wholesale inflation on energy prices has actually been caused by the war in Ukraine and the reaction of the global energy markets, so there is ultimately a limit to what the UK Government can do to ease a wider problem that is now affecting every country in the World.
Yet the Government has already announced a range of measures that will benefit every household in the UK. To start with, the recent tax cut to National Insurance is worth £330 for over 30 million working people, noting that the new Prime Minister is likely to review the 1.5% levy on National Insurance introduced to help pay for social care. The recent £15 billion energy rebate and unprecedented windfall tax announced on energy company profits will also yield up to £400 each for 28 million families, with households in Council Tax bands A - D receiving an additional £150 rebate and more than 8 million households on means-tested benefits benefiting from a further £650. Furthermore, pensioners will receive £300 per household and the reduction in fuel duty that has already been announced equates to 5p a litre.
In terms of what happens next, I do not believe that the Government has a responsibility to regulate or cushion every aspect of people’s lives – that is called Socialism – but I am confident that more support will follow. Contrary to what some people have suggested, the Government has been fully functioning throughout the Summer, with Ministers at their desks, departments fully manned and a range of contingency planning being conducted. The Treasury and Business Department have therefore scoped a range of options which will be presented to No.10 once the new Prime Minister is in post.
To begin with, there is a proposal on the table to freeze the price cap with a view to central Government effectively issuing zero interest loans to energy companies to afford the increased wholesale prices. Someone ultimately has to pay for this, namely the UK taxpayer, but this should ease the immediate burden if it is agreed by Ministers and provide some solace for the tough Winter that lies ahead for many. And noting that OFGEM sits outside of Government and can effectively set the cap where it wants, there will no doubt be a range of other fiscal and practical measures too – and rightly so. Politically, it would have been wrong for Boris Johnson to have written blank cheques on behalf of his successor and the new Prime Minister must therefore own - in full - whatever strategy lies ahead.
In terms of what we can do ourselves, it may pay to shop around for the best deal once energy companies remove the block on doing so. It should also be noted that consumers often pay more each month than they actually consume, hence building up a surplus. I intend to raise this when I return to Westminster as it may be that energy companies are hiking monthly payments to build up cash, ensure greater leverage with wholesale purchases and perhaps even attract interest so I would need to understand why this seems to be common practice. But monthly bills do not necessarily provide the full picture and it will help if consumers only consume what they need, not least by turning off unnecessary lights, putting the heating and water on a timer, unplugging electrical appliances and using low watt bulbs.
Lastly, it is vital that the UK Government now refines its longer-term energy plan to safeguard energy supplies for the future. I find it crass for example that the UK continues to be dependent upon wholesale international energy markets and imports when we should by rights be self-sufficient. And for the avoidance of doubt, our strategy needs to include sustainable and green forms of energy such as solar, wind and tidal, as well as nuclear and more traditional forms of energy, such as domestic gas, North Sea oil, coal and even fracking, if deemed locally appropriate. Ultimately, if we are serious about keeping costs down, as well as developing more sustainable forms of energy for the future and ensuring our own strategic independence, a pragmatic and balanced approach will be needed.
As your MP, I do recognise and feel the pressures that local people are facing, and I am in permanent dialogue with Ministers. I understand that people are deeply apprehensive, and worried about their bills this winter and I will continue to do everything I can to lobby for more support.