We hold these truths to be self-evident
“We hold these truths to be self-evident,” the United States’ declaration of independence begins, “that if you quadruple household energy bills then loads of people won’t be able to pay them.” Okay, so I added that second bit, but it’s true.
Why have energy bills risen so drastically? That’s the £4,266 question. If we don’t understand why they’ve gone up, we won’t choose the right solutions to bring them down again.
Gas prices spiked before Russia invaded Ukraine. Global energy demand surged as Covid restrictions relaxed. Then Russia’s squeeze on gas supplies, and profiteering by speculators, drove wholesale prices higher. Britain imports 56% of our gas, and our pipelines are connected to Europe’s. So British wholesale prices pretty much track the rest of Europe.
But we’re also more exposed to global market swings than our near neighbours. Most of our homes are heated by gas and around 37% of our electricity is generated by gas-fired power stations. We have some of the oldest and leakiest buildings in Europe. And the fact Britain lacks gas storage capacity means that when the world sneezes, we get cold.
The mix changes from day to day, but roughly 20% of our electricity comes from nuclear, and 43% from renewables. But the market is set up so wholesale prices for nuclear and much renewable electricity track the gas prices. You might think that means that energy companies are raking it in. You’d be right. Their costs are no higher than last year, but we’re being squeezed until our pips squeak.
So what needs to happen?
First, it’s a crisis, so act now. Domestic energy, petrol, food, imported goods – all are going up. The obvious answer is to give people an inflation-proof pay rise. The wage-price spiral is a scare story from people who want a low-wage Britain. Energy and food prices are not high because rail workers want a fair pay rise.
Let’s uprate benefits and pensions too. Pay for it with a windfall tax, and move towards a wealth tax. A wealth tax would raise around £130 billion every year, and boost economic investment.
Energy prices affect businesses too. We need to get the price down sharpish. So let’s regulate the price that wholesale suppliers can charge – it’s an emergency. If they don’t want to trade on that basis, politely offer to take them into public ownership.
In France, President Macron has stopped household bills rising by more than 4%. By fully-nationalising the French energy company EDF – already 86% state-owned – with the French Government absorbing the costs.
Who owns Britain’s nuclear power plants? EDF Energy. Much of our electricity generation is already nationalised. By France. Just like our buses and train companies are owned by foreign governments. Take back control, anyone?
Second, we need a long-term solution as well as a quick fix. Otherwise we’ll face this problem every winter. Public ownership alone is not enough.
We need rapid and massive investment in renewables. And build them in Britain. We know how. In the North of Tyne we’re investing £25 million in offshore wind – 15% of our budget. If the Government matched that percentage it’d be spending £169 billion a year. It’s actually spending £285 million.
Heat pumps and electric vehicles will increase electricity demand. With a massive offshore wind project, we could have super cheap electricity. Unlike fossil fuels, no one has to pump the wind out of the ground. When it’s windy, and supply exceeds demand, use electrolysis to make zero-pollution hydrogen. On a calm night, when there’s no sun or wind, use the hydrogen to replace natural gas.
And those leaky buildings won’t fix themselves. Let’s invest in a massive retrofit programme. Nearly half the North of Tyne’s housing stock isn’t energy efficient enough. 140,000 homes need to be retrofitted. That’d create 3,500 local green jobs. We’ve done the planning, we can get cracking straightaway if Government work with us.
The long-term solution adds up to energy independence. Britain’s a windy island with a massive shoreline. Let’s use it.
Our Government is doing nothing. And doing nothing is a deliberate choice. The Founding Fathers of the United States didn’t want to be subjected to foreign tyrannies. Neither should we.