Soaring energy bills require pragmatism not political pipe dreams
Unconvinced by every politicians’ sketch of how to protect UK households from the soaring cost of energy this winter? It’s a reasonable view. There are holes in every plan we’ve heard so far.
Liz Truss’s preference for tax cuts and the removal of “green levies” is the worst of the lot as it doesn’t get close to recognising the size of the coming storm. Reversing national insurance increases hands the greatest benefit to high-earners. And cutting the odd £160 of charges on bills, or even VAT at 5%, is a case of tinkering around the edges if the average household is looking at an increase of £2,000. An encounter with reality awaits if she makes it to No 10.
Rishi Sunak’s hint that he would boost the £15bn cost of living support he unveiled in May as chancellor is better in that it would direct cash at households most in need. But even a repeat of £650 payments to 8 million low-income households on universal credit wouldn’t cover the rise in energy bills under the latest projections. Meanwhile, the definition of an unaffordable bill moves ever higher up the income spectrum.
Labour’s proposal to freeze the price cap at the current level has the virtue of simplicity but, at £29bn for just six months, would become hugely expensive when repeated. It is also untargeted: the biggest beneficiaries would be the heaviest consumers of energy, who tend to be wealthier households. As the Resolution Foundation points out, the richest fifth of households would benefit more in six months from Labour’s price cap than they would in a year from a cancellation of national insurance rises.
The foundation has a better idea. Or rather two. For preference, it would back a social tariff for low- and middle-income households, including those not
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