We are the country taking the energy crisis least seriously. Even Shell’s boss is baffled
Wars cannot be fought successfully by libertarians. They demand collective effort, shared sacrifice, strategies for deploying scarce economic resources and collaboration with allies. All are anathema to a libertarian like the prime minister, Liz Truss.
State initiative inviting collective effort and sacrifice is off-limits as “nannying”. Demands on the better-off and on companies enjoying extreme windfall profits to share their proper burden are vetoed as coercive and confiscatory. Even working with the foreign “other” is regarded with suspicion as a constraint on sovereignty. Put not your trust in libertarians – especially in war.
It may be indirect, but Britain is in a war against Russia. But we are the country taking the winter threat of Putin-induced energy shortages least seriously. We are alone in not asking for energy savings or efficiencies from business or households in exchange for the generous bounty of an indiscriminate price cap – offered to everyone regardless of circumstance. With negligible capacity to store gas ourselves, we depend on the kindness of EU countries to help us if Putin turns the screw on gas supplies this winter. And we are the country whose incredible fiscal policy – stupendous tax cuts at the same time as huge spending on an indiscriminate energy cap – is cast as if the world were as placid as a millpond, so provoking contagion in the financial markets that risks damage to our allies.
The emphatically non-libertarian Biden administration openly regards Truss as out to lunch – but so do former friends in the EU. The design of Truss’s energy price guarantee package, up to £150bn, is regarded with incredulity. Her veto of a £15m public information campaign designed to suggest how citizens might save energy – because it represented a state intrusion into personal space – is an accurate window into Truss’s worldview. She truly believes this libertarian nonsense.
In her world, there can be no collective endeavour to save energy and no fair sharing of sacrifice. Thus, it is illegitimate to tax the windfall profits of energy companies, let alone curb the speculative activity of energy traders bewildered by the scale of the profits they are making. This would improperly confiscate profit, which is the driver of all human activity: any obligation to society or others is delusional.
Thus the outgoing CEO of Shell, Ben van Beurden, may say publicly, as he did last week, that the market cannot be allowed to operate to hurt the weakest: “One way or another, there needs to be government intervention... that somehow results in protecting the poorest. And that probably means governments need to tax people in this room [of energy companies] to pay for it – I think we just have to accept [that] as a societal reality.”
But Truss lives in the parallel universe of libertarian Ayn Rand novels in which alleged “societal realities” are the enemy of the moral imperatives of choice, personal freedom and individual responsibility. In her view, Van Beurden suffers from “false consciousness”, as Marxists used to say of workers content to live with capitalism. Shell may have got lucky with the oil price, but its sole responsibility is to distribute its profits, however excessive or lucky, to shareholders who will spend it as they think fit or invest in what it considers likely to yield profit in future. It must and should not worry about those “realities”. She doesn’t. So why should Shell?
Thus the irresponsible approach to energy. Capping energy bills at £2,500 per household this winter is certainly better than no cap, but for the 10.5 million people on absolute low incomes after housing costs, bills on that scale remain impossible. They should have had more relief, the better-off, less. Further windfall taxes should have been levied on energy companies, as Shell’s CEO suggested, and a huge campaign launched on energy saving. The government should set an example; following Germany, France and Spain, no public building should be heated above 19C. There could be traffic speed limits and restraints on lighting buildings, adverts and shop fronts. EU states are setting targets for reducing energy usage by 8%-10%. Why not Britain? The whole package could have been targeted and cheaper, and the billions saved could have been spent on a mass programme to scale up the insulation of our hopelessly energy-inefficient housing stock.
No dice. Instead, our government is praying that we will avoid the National Grid’s “extreme scenario” of Putin-induced, Europe-wide energy shortages and France, Belgium and Holland being incapable of supplying us electricity in the winter, which would force a succession of three-hour rolling blackouts. But France has signalled that it may not be able to export energy this winter and Putin, after a fall in gas prices over September, is all but certain to reproduce what he has done with Opec and impose gas shortages or even no gas on Europe. The extreme scenario is all too likely.
Worse, as the Bank of England told the government last week, its minibudget of £45bn of tax cuts on top of this carelessly expensive approach to energy nearly triggered a financial implosion. Yet the markets are now learning that Truss wants to use investment zones to butcher up to another £12bn of corporation tax revenue – even as the Bank comes to the end of its emergency gilt-buying programme. Truss’s Britain is a hotbed of financial instability.
Yet the country and the Conservative party are chained to this imbecilic policy framework for at least the next two years. It may lead to political annihilation for the Tories at the next general election, but the damage that is being done remains colossal and hard to repair. Even the chancellor, vainly trying to cap the number of investment zones, and Jacob Rees-Mogg, suffering a veto of his proposed energy public information campaign – both fully paid up members of the right – must be dazed by the ideological obstinacy of their leader. The only silver lining is that Britain, after this, will never again flirt with toxic libertarianism.
• Will Hutton is an Observer columnist
EU states are setting targets for reducing energy usage by 8%-10%. Why not Britain?