In April, Portugal and Spain requested permission from the EU to cap the price of wholesale natural gas around the 40 Euro mark. The EU agreed the action and the wholesal price was duly capped. In France, energy price rises were capped at 4%, a move made possible, only because, the major power generator in France, EDF is 80% owned by the French Government. EDF generates electricity from a network of nuclear power stations and the Company is now in the process of suing the French Government for the restoration of 8 billion euros lost due to the imposed restrictions.
Yet in the UK, Rishi Sunak initially decided to attack the problem of rising energy prices with a £200 gift to the energy companies on behalf of every household in the UK. The £200 would be a loan, which would be paid back at the rate of £40 per annum. This “scheme” thought up by the crafty Chancellor, was deemed to be inadequate by popular opinion, and so he revised his offer to a £400 gift on behalf of every UK household with nothing to pay back. This is the only measure in place that directly addresses rising energy prices, yet, it does nothing to lower the unit price of electricity or gas, and, it benefits rich people with multiple homes (like Prince Charles), more than poor folk with only one dwelling. People in multi-occupancy homes, get nothing, as the Landlord is usually the bill payer. The reality is that profitable energy comapnies will receive a bailout of £10 billion, money the Treasury will have to borrow. Don’t be fooled into thinking that Sunak’s “windfall tax”, which may raise £5 billion at most, will poy for this, it won’t. This will be another £10 billion thrown on the £2.4 trillion debt pile, which now costs £104 billion a year (and rising), to service.
But, Sunak has a track record of ill considered actions during his time as Chancellor of the Exchequer. His “bounceback loan” scheme, lost over £4 billion to fraud. His furlough payments, and “eat out to help out” scheme also lost over £4 billion to fraud and the total lost will amount to many tens of billions. He refused to give HGV drivers a pass when it came to IR35 and 60,000 truckers went back to the EU, long after the UK had left that club of 27. Sunak could have easily invented a new “scheme” for truckers to prevent worker shortages in the UK, but, he didn’t. What about his decision to end the triple lock for state pensions? Pensioners were due to recieve 8.1%, which Sunak thought too much, the triple lock was removed and pensioners are receiving 3% when the inflation rate is 11.8% as measured by the Retail Prices Index. And what of the fact that a quarter of The National Debt is linked to RPI inflation, yet Sunak took no action to insure the debt against increases in RPI and the losses are estimated at £11 billion (so far).
With such a record of “wanton disregard for taxpayers money”, as Lord Agnew recently pointed out, is it any wonder that Sunak is way behind Truss in the Leadership contest? Sunak’s ill considered “scheme” to pay energy companies £400 per UK household, begins in November, and there’s still time to scrap it and cap the unit price of electricity and gas. I have criticised Ed Davey, Leader of the Liberal Denmocrats for his statement that this is a simple fix, it isn’t. A price cap on unit prices needs to be carefully thought out, because the UK Government will be on the hook for any losses suffered by the energy companies. The problem with the Sunak plan though, is that it fails to address the rising cost of energy for UK’s small business sector. There is no price cap for businesses, and they are being quoted 70p per KWh plus £3 daily standing charges. Many thousands of small business owners are ready to throw in the towel this Autumn and Winter. So, maybe the new Chancellor should step up and use his authority to reduce unit prices, and he does have that authority, as the rules were changed in the Blair/Brown era. I doubt that is going to happen though. Everyone should now prepare for a long “winter of discontent”, a culmination of poorly thought out schemes from a Government that is way behind the curve.