Energy crisis: UK Government has been asleep at the wheel

This is creating unprecedented financial problems for families already reeling from rising prices and some observers have warned that this will be the hardest year in living memory for many who face the impossible task of juggling competing demands on a limited income and literally have to choose between properly heating their homes and putting food on the table.

The full scale of the problems were starkly laid out yesterday when Ofgem announced a 54% rise in its energy price cap – an extra £693 on millions of bills – which takes the typical annual household bill for gas and electricity to £1971 a year.

Beset by wave after wave of conflicting facts, claims and counter claims, consumers trying to work out what exactly has gone wrong have been left scratching their heads. We’re told demand for gas fell during the pandemic because so many business premises were closed. When demand grew steeply as the economy recovered, suppliers were unable to meet it, with resulting huge spikes in prices.

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Explanations of the shortage range from Europe’s low storage levels to suspicions that a drop in gas supplies from Russia are a sign that Vladimir Putin is orchestrating the whole crisis for his own ends. Consumers have no way of knowing what’s really going on but one thing at least is certain … big business will do anything to protect their profits while the public shoulder the cost.

A High Court hearing at the beginning of December saw the UK Government accused of hiding billions of pounds worth of financial support when it is deciding how much oil and gas to extract from the North Sea. The level of that UK Government support for the fossil fuel industry has been estimated to be as much as £12.5 billion. Yet many of the companies taking oil and gas from the North Sea are foreign-owned and that money brings no benefit to Britain.

Shell and BP have paid no corporation tax on oil and gas production in the North Sea for the last three years. They also claimed tax reliefs of nearly £400 million, according to an analysis of figures by the Observer newspaper last year. Shell and BP made more than £7bn in profits between them and Shell’s boss Ben van Beurden received £5.2m in pay and perks in 2020, according to the Daily Mirror. Bernard Looney, the boss of BP, earned £1.7m in 2020. So we know who certainly isn’t suffering from the current mayhem.

The big oil companies pocket millions of pounds in public money but whenever profits take a tumble it’s the public that suffers. ’Twas ever thus. During the 2008 crash, the banks were bailed out by public money but it was not the public who benefited from their recovery.

The current energy cost crisis follows recent celebratory reports that renewable energy provided “the equivalent” of 97% of Scotland’s electricity consumption in 2020, up from 59% in 2015. Now, though, we’re told not to reply too much on renewables because a lack of wind has recently reduced output dramatically.

Scotland’s position within the UK has in any case worked against our country accruing the positive benefit of our ability to generate substantial amounts of renewable energy. Scottish renewable energy generators are charged substantial fees to connect to the National Grid, while equivalent projects in England are actually paid to connect.

The £465m charge levied on Scottish energy providers compares with a £30m a year connection subsidy paid to generators in England and Wales and is the highest grid access rate in Europe. Stephen Flynn, the SNP’s business energy and industrial strategy spokesperson last week described it as “the great Scottish renewables robbery” and you can certainly see his point.

MEANWHILE the UK Government’s performance in managing energy policy has certainly left a lot to be desired. Its focus on market competition led to the creation of many of the smaller providers that have recently been forced to close because the cost of gas meant they could no longer afford to supply gas to customers at the agreed rate.

Britain has been more badly affected by the current price crisis than our European neighbours because Westminster has been asleep at the wheel. More homes in the UK use gas central heating than those in Europe and we store less of it. Despite this, the UK has dawdled on preparing a package of measures to ease families’ suffering while European countries powered ahead.

The Dutch cabinet agreed in October to save consumers an average of €400 a year by cutting energy taxes, set aside €150m to boost home insulation and a further €500m to compensate small firms.

The French government has spent €8bn to cut some electricity taxes and forced the state-owned electricity company EDF to cut the cost of electricity to well below the market rate.

In Norway, the government set aside the equivalent of £664m to help householders meet the extra costs, consisting mostly of direct subsidies. It promised to cover 80% of what it described as “socially unjust” energy bills over a

certain level.

In contrast, UK Chancellor Rishi Sunak waited until yesterday’s Ofgem announcement to finally reveal a woefully inadequate combination to “ease the impact” of the energy price rise. The main measure was a £200 ‘“discount” on bills – but consumers will have to pay that back. Although Sunak admitted that “even those on middle incomes will fell the pinch” he came up with little realistic ways to help hard-pressed families.

The UK has sleep-walked into these catastrophic rises which will push yet more people into poverty and has now failed to offer households any meaningful way of paying for that failure other than to take on commitments to pay back so-called “discounts” and thereby put even more pressure on stretched family finances.

As long as Scotland remains within the Union it will be shackled to an economic system which penalises Scottish successes in renewable energy while depriving it of the ability to forge a more sustainable energy policy for the future.

Earlier this week we saw yet another example of Westminster wasting its time and energy to hoodwink us into believing it has Scotland’s best interests at heart. Michael Gove unveiled the laughably mistitled Levelling Up white paper which rode roughshod over the devolved powers of the Scottish Government while avoiding any specific commitments and details of any new spending.

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It was a lacklustre document that could barely summon the energy to even pretend it cared about Scotland. Gove exhibited that same lethargy when he appeared on Times Radio and suggested relocating

the House of Lords to Glasgow. Or maybe not Glasgow, he expanded. Maybe York. And only for “part of the time”. This was an idea which had clearly not even been thought through.

This is a government that can’t even be bothered to formulate a coherent message to convince Scotland of its good intentions. This is a government which no longer even pretends to care for those suffering deprivation because of its own policies and inaction.

This is a government only too willing to help its rich friends avoid paying their way while refusing to lift a finger for those good, honest families falling victim to the energy giants’ greed.

The need for a referendum to begin the process of escaping a failed state which can no longer provide even the most basic essentials for its citizens grows more urgent with every passing day.