As Britain prepares for the storms of winter, the Prime Minister must be wishing he had prepared better for the political battering that his Government is taking over heating bills. This wasn’t the kind of political weather he anticipated this autumn.
Mr Cameron and the Chancellor, George Osborne, had banked on having a relatively easy time of it, telling the country that austerity had paid off, that growth levels were rising and that the economy had turned a corner. Instead, ministers are fumbling for answers as Labour makes the running with pledges to bring unpopular energy giants to heel. Rising GDP is almost forgotten. Nor does the storm over energy show any sign of abating. In the latest salvo, the charity Age UK says its latest research suggests more than three million elderly people fear they will be not be able to stay warm this winter, largely because of rising energy bills.
A mass of contradictory-sounding advice is not easing the fears of older people. The Government’s Cold Weather Plan urges the elderly to keep the heating on all the time. Other voices insist that heating ought to be turned off by day, except in the living room. Mr Cameron urges us to shop around for energy providers. The Energy Secretary, Ed Davey, among other things, counsels thicker jumpers, a piece of advice that has met considerable derision, inviting comparisons to the saying attributed, perhaps unfairly, to Marie Antoinette – that hungry Parisians should eat cake, if they can’t afford bread.
Mr Cameron is weary of being called a posh boy who doesn’t know the price of milk. But it is his own fault if the stinging words of the dissident Tory MP Nadine Dorries now come back to haunt him. It is remiss of him that he failed to anticipate the level of outrage felt over the recent energy price rises. Worries about these bills are now one of people’s most pressing concerns, surveys show. A real fear of shivering through the coming winter is no longer limited to old people, or the poor. It now embraces a good portion of the middle class as well.
This is an alarming development for the Tories, as the votes of that “squeezed middle” section of society may prove decisive in deciding what is likely to be a tight election. The Government will have to do more than write off Ed Miliband’s call for an energy price freeze as Marxist. It should have given Sir John Major’s call for a one-off windfall tax on the energy companies a more respectful hearing.
Above all, it has got to stop reacting and show some sign it is taking control of the energy issue. If it fails to do so, the idea will gain ground that the Government does not care about energy bills, or any other kind of bill, and Labour’s charge that the Tories are just the party of the rich will start to stick. If that happens, no amount of good GDP news will help Mr Cameron in 2015.
At roughly double the current price of electricity, the figure is bound to stir complaints that ministers have given in to a foreign energy giant at the expense of hard-pressed British consumers by whom the subsidy will inevitably be paid over time in the form of yet higher bills.
Consumers have every right to feel angered by the swingeing price rises announced by Scottish and Southern and then British Gas, which the other big power companies are bound to follow.
But we must be careful to separate out what is at stake here. The existence of what operates in practice as a cartel in the energy sector is unquestionably a problem that needs addressing, although whether the 20-month price freeze that the Labour leader Ed Miliband has floated is much of a remedy is debatable.
However, our need to attract investment to nuclear power is a separate matter, and critics of the Big Six and their pricing practices should not conflate the two. Britain’s coal power stations are coming to the end of their life. Green power alone cannot fill the void, which does not mean we should not invest more in it, merely that we need to remain clear-eyed about our expectations. That leaves nuclear power, which provides almost 20 per cent of Britain’s total generating capacity. The problem is that this sector has been left in virtual limbo for decades, and the plants have now either closed or face decommissioning. Hinkley A shut back in 1999 and Hinkley B must follow suit by 2023. Britain last built a nuclear plant, at Sizewell, in the mid-1990s.
To avert the danger of the lights going out, we need urgently to ensure an increase in the available supply of power. One new plant at Hinkley C, which could supply about 7 per cent of UK energy needs, is not going to solve everything but is a start. Meanwhile, the argument about whether the guaranteed price offered to EDF is an incentive or a subsidy is semantic. If it takes a subsidy to get a new nuclear plant built, so be it.