Changing the incumbent of Number 10 Downing Street (yet again) has given the Government an opportunity to re-set it’s energy policies, but how much change will the new Cabinet take on board in the coming weeks and months?
The crazy, frenetic and short-lived premiership of Liz Truss saw fracking for shale gas return as a controversial option, but Rishi Sunak has quickly restored some commonsense and dropped that possibility unless science shows it can be done safely.
Next up in his firing line could be Truss’s highly contentious policy stances taken in respect of where solar panel farms and wind turbines can and cannot be located, or the issuing of extra licences for oil and gas drilling in the North Sea from when he was Chancellor.
But before then all eyes will surely be focused on the Autumn Financial Statement and whether it includes support for increased investment in energy efficiency measures - such as funds for improving the insulation of our homes, or in expanding the subsidy package to replace domestic boilers with heat pumps.
A further windfall tax on the huge profits of oil and gas producers like Shell and BP is a possible source of much needed revenue for such investment. While the PM and Chancellor do not appear overly keen to go there, it would be a popular U-turn with the public.
Let’s hope for more commonsense from our politicians and pray for a mild winter
An affordability crisis
After the shocks which the economy and public finances suffered in the aftermath of the Kwarteng mini-budget, it seems inevitable that another period of austerity awaits the country.
Whether support for struggling families, or increasing investment in sustainable energy sources can survive as priorities remains to be seen. The cap on energy unit costs has already been cut back from two years to just six months, while a Treasury led review of a more targeted package is to be conducted.
Evidence recently emerged of the growing scale of the affordability crisis on families, with the energy regulator Ofgem revealing that the number of UK households in arrears on their energy bills soared to record levels with more than two million behind on their electricity payments.
Ofgem’s figures showed that at the end of June, some 2,347,511 households were behind on their electricity bills and 1,858,585 were behind on their gas bills. Both totals had risen by about a quarter in the preceding three months.
A similarly bleak message came out of a survey run by the Financial Conduct Authority which found that one in four adults in the UK were either in financial difficulty or would fall into trouble if they suffered a financial shock.
The FCA found that about 7.8 million people were finding it a heavy burden to keep up with their bills, an increase of about 2.5 million people since 2020. In addition 4.2 million people had missed bills or loan payments in the six months before the survey took place.
The financial challenges are concentrated in more deprived areas of the UK, with people in economically challenged regions more likely to be in financial difficulty than their peers. About 12% of people in the north-east and 10% in the north-west were struggling financially, compared with 6% of people in the south-east and south-west.
Extreme energy saving measures
This coincided with reports from Citizens Advice that growing numbers are taking extreme measures to reduce their energy bills. Actions reported to CAB advisors included people unplugging their fridges and freezers, washing their clothes by hand, not heating their homes and skipping meals to save money.
The Citizens Advice also saw a record number of people in September who could not afford to top up their prepayment meter – the eighth time this record had been broken in the last nine months. Worryingly an extra 10,000 households a month are being switched to prepayment meters, which pay the highest energy prices and cannot spread bills over the course of the year.
In the midst of this cost of living crisis we heard that Downing Street officials over-ruled plans by the Business and Energy Department to issue advice to households on how they could reduce their use of energy this winter. With both Truss and Rees-Mogg now removed from office, this decision might be reversed.
Meanwhile the National Grid has warned that we might face a rolling programme of power cuts in the coming months, if energy consumption gets dangerously close to matching or even exceeding the amount of energy available, due to shortages in our gas supply.
And one of the country’s biggest suppliers of energy to domestic users has written to its customers about ways it will be incentivising them to change their energy use habits over the winter, with a specific emphasis on reducing the use of electrical appliances, particularly during the peak 4-7pm period.
One other policy which hopefully will be scrapped is Truss’s planned ban on allowing solar panels to be sited on the majority of England’s farmland – a policy that was stridently opposed by many landowners, who see it as a valuable source of income and a way of making farms more financially viable.
Truss and her environment secretary, Ranil Jayawardena, wanted to ban solar from about 58% of agricultural land, by reclassifying less productive farmland as “best and most valuable”, making it more difficult to use for energy infrastructure.
This policy completely ignored the many positives about new solar projects which are quick to build, can generate electricity nine times more cheaply than gas, can be co-located with grazing and the land used for them can be easily returned to their former use. Solar panel parks can also be easily hidden or screened by the use of hedges. What’s not to like about them?
There are suggestions the new PM is not a fan of onshore wind turbines, but a combination of new offshore wind turbines and an increase in approvals for solar panels on lower grade and inefficient farmland, could probably be made to work.
Practical steps to take
As we await news of the energy support package review, I am sure the majority of us will readily accept more solar panel parks being established, especially if it delivers cheap and reliable electricity in the very near future.
In recent opinion polls the public has shown increasing levels of support for sustainable forms of energy production, as well as an appetite for improving the energy efficiency of their homes through greater insulation.
What many of them lack is the money to pay for it all and the knowledge on what work needs doing to their home.
A Government funded public information programme and support for a package of insulation works would seem like a sensible start. The new PM has already promised several times to help the poorest in society, but without giving away any details.
Capital investment on a big scale could create a huge number of jobs, particularly in less well-off areas, as well as reducing our use of energy and cutting utility bills. Borrowing for infrastructure projects tends not to spook the markets.
To deliver this sort of package, let’s hope for more commonsense from our politicians and in the meantime pray for a mild winter.