Minor tax cuts won’t save Britain this winter, but a game-changing energy policy could

A reduction in VAT? We will take it. A break in the “green levy”? Why not? Put everything in place. It doesn’t move the dial much, but it’s never stopped Westminster before.

There is more than the usual air of unreality in the leadership debates this time around. While Liz Truss and Rishi Sunak stand on stage blaming each other for the coming recession (handy clips for Labor in 2024), the real culprit, Vladimir Putin, is wreaking havoc on European energy markets. Will he turn on the gas or not? It’s the only question that matters to the thousands of people who could freeze to death. But so much for that. The BBC wants to talk about Mr Sunak’s shoes.

Let’s talk about his shoes, then. Apparently they cost £450. The energy price cap is now set to double to 8.5 Sunak shoes per year in January (or 855.5 Truss earrings, to use his supporters’ preferred metric). The ceiling price has already almost doubled this year. These are graphics that would make Chris Whitty proud.

In the end, the country is rapidly impoverishing. The current discussion of taxes, wages, welfare, inflation and interest rates is largely a debate about how to distribute this impoverishment. What we urgently need is a strategy to slow it down and then reverse it.

There are few quick fixes. Fracking and increasing production in the North Sea on a scale needed to affect prices is years away, as is next generation nuclear. However, we can make the most of what we already have.

The first priority should be an emergency home insulation program. Some councils are raising money here and there to renovate buildings, but nothing on the scale needed. The government should set up a fully funded task force to have a significant portion of the houses complete by September and scale up from there. Yet I’m told that initial proposals to do this nationwide earlier this year came to nothing due to a ‘lack of interest’ from No 10. This is sheer negligence. .

The second makeshift measure is expected to be an urgent mission to rebuild the country’s gas storage capacity. When the Rough gas storage facility was closed in 2017 it took away 70% of our gas storage in the UK. In its wisdom, the government thought that would never be necessary. This spring, National Grid was forced to get permission from regulators to stop gas imports because our pipeline network is overcrowded and the export pipes to Europe can’t take it anymore. It’s in the midst of a global gas shortage.

If the UK still had enough storage capacity, we could fill empty gas tanks with gallons of stuff to get us through the winter. Centrica’s chief executive said this week he was in talks with the government about reopening Rough before winter, at a cost of £2.4billion. But Rough isn’t the only empty gas tank lurking under the UK’s soil and sea; there are dozens more. The Sales Department should make every effort to expand or reopen them in order to relieve the exasperating bottlenecks in our gas network.

Beyond that, we should lead the rush to sign new long-term gas contracts, rather than having to pay whatever the price of the day. Thanks to a long-standing political error led by the British, most of Europe now buys its gas at the “spot” – the current price – instead of signing 10-year contracts at a predictable price. The only way to cover the horrendous prices we are seeing now is to revert to these more stable contracts.

German energy company EnBW recently started doing just that when it signed its first-ever long-term gas contract with a US supplier. There are potentially similar opportunities to pursue in Qatar, Algeria and Australia. The UK should be at the center of this new gas race, rather than getting bogged down in irrelevant fuss over net zero. Whether climate activists like it or not, gas will be an essential part of our energy mix for decades to come. If European governments had been honest about this earlier, we might not be where we are today.

Meanwhile, the whole process of energy pricing in this country needs to be rethought. Currently, we operate a system designed for old-fashioned gas and coal suppliers, in which generators receive the highest price available for electricity. Observers have been warning for years that this means consumers are paying through the nose when they don’t need it. The Treasury finally started a review of the system in May. It’s unclear if anything can be materially changed in time for this winter without causing chaos, but it could surely start a healthy market overhaul ahead of the election. Better late than never.

The truth is, it’s going to be an ugly year. Whoever leads it, the government, I predict, will soon dip into its coffers to help poor households more during the winter. Even if she balks at the cost of more welfare, Ms. Truss may decide it is necessary to protect the consensus on the war in Ukraine.

What is amazing, however, is that there has been no concrete proposal put forward by the government, or either of the leadership candidates, as to how exactly they will avoid a repeat of the same scenario next year. Worse still, the current lame government seems content to waste an entire critical summer doing nothing. Why is there no contingency plan for insulation? Why isn’t anyone talking about how we store and secure cheaper gas as quickly as possible? Has the government gone on vacation?

We see debate after debate in this leadership race, in which the candidates bicker over taxes, inflation and “supply-side reform”. Yet not once was there a serious discussion about the actual energy supply and how to expand it as quickly as possible.

It is the skyrocketing price of gasoline that is pushing us into recession and fueling inflation. Until Mr. Sunak and Ms. Truss have something convincing to say about it, all they do is argue passionately about how to slice a rapidly shrinking cake.

Previous China's FDI rises 17.4% in H1 amid 'capital outflow' rumors as companies 'dare to invest' in streamlined market
Next Money-making tips: Man shares 'great way' he earns up to £3,000 extra every month | Personal finance | Finance