Starmer’s ‘five-point plan’ was not a plan | Nils Pratley
‘We have a five-point plan for the immediate crisis,” declared the prime minister during his remarks from Downing Street on Wednesday.Really? Two of his five points were measures on energy bills that pre-date the Iran war.One was a description of support for a sub-set of consumers but dodged the key question of who else could get help.Another stated the government’s longstanding energy strategy in unchanged terms.The last was a diplomatic policy, presumably shoehorned into the cost-of-living passage because a five-point plan sounds better than a four-point one.
Let’s take them in order.First: “We’re cutting energy bills by over £100 per household today.” That, very obviously, is not a response to “the immediate crisis”.The chancellor announced in her budget last November that some green levies would be switched into general taxation for three years.At the time, Rachel Reeves claimed a £150 cut, ignoring the awkward reality that energy bills contain many moving parts, such as rising charges for maintaining and upgrading the electricity and gas grids.
Those charges duly trimmed the cut to £117 for an average dual-fuel household.So, unfortunately for political-messaging purposes, consumers have merely been shown that a supposedly decisive £150 can morph into “over £100” three months later.Second: “We’ve extended the cut in fuel duty until September, and we are monitoring that situation daily.” Again, Reeves announced the cut in November.It’s not new.
Virtually nobody believes the 1p a litre increase scheduled for September will happen – or the 2p increases due in December and next March.But, until Starmer or Reeves say so, the government can’t claim to have acted on fuel duty in response to the Middle East conflict.Third: “We’re supporting people exposed to heating oil rises – setting aside £53m.” Yes, that one counts as a response to the immediate crisis.But the big unknown is who could be covered by any “targeted” support on gas and electricity bills when the impact is felt from October.
Other questions include when assistance would take effect, how it could be delivered and how “cliff-edge” cases would be treated.One can’t blame the government for vagueness at this point because it doesn’t know the size of the challenge.But £53m will be a rounding error if the chancellor ends up having to find billions.Fourth: “We’re taking back control of our energy security, by investing in clean British energy.” Come on, the Clean Power 2030 plan cannot be accelerated in response to the war.
It is a five-year £200bn infrastructure project.Nuclear power stations take at least a decade to build.The windfarms commissioned this year will start spinning in 2028 and 2029.They all help necessary energy transition, but most energy analysts project that savings for consumers from a cleaner system only start to arrive around 2040, assuming the government continues to load the bulk of costs and levies on to bills.And, by the way, gas-fired generation will still be needed as back-up to intermittent wind and solar, so the fossil fuel “rollercoaster”, in the over-used political metaphor, is not wholly escapable.
Starmer’s final point was “to continue to push for de-escalation in the Middle East”,That is uncontentious and, yes, the timing of a return to “normal” oil and gas prices will, to a large degree, determine the size of the hit to the UK economy and consumers,But we knew that already,The real debate is about what happens if an energy price shock turns into a supply shock, possibly meaning rationing of some form,That would be when a proper five-point plan would be needed, and also be the moment when Reeves would have to decide how much of her fiscal headroom she’s prepared to allow to disappear.
As with previous energy shocks, the decisions aren’t easy.But repeating measures taken in last November’s budget is not a plan.
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