The grim spectre of the 1970s haunts politicians to this day

From rising gas prices to spiralling debt, the problems facing us this winter are eerily familiar

The auguries are eerily familiar to anyone who lived through the 1970s. An energy crisis, rising inflation, price controls, massive indebtedness and complacent ministers insisting that there is nothing to worry about. Even the newspaper headlines recall that time: “Prepare for a winter of discontent”, “UK lights not going out says Kwarteng”. I expect to see “Crisis? What Crisis?” next but have probably already missed it.

More than 40 years on, it is a period that continues to cast a pall over politics. The very idea that the lights might go out sends shivers down the spines of politicians who were not even born the last time it happened.

In 1973, the Arab Opec countries curtailed the export of oil in retaliation for the West’s support of Israel in the Yom Kippur war. The price of crude oil quadrupled overnight, a bit like wholesale gas today. In Britain, the problems were compounded by a miners’ strike over the winter of 1973-4, which plunged the country into what the chancellor Anthony Barber called “the greatest economic crisis since the war”. Energy shortages had knock-on effects on transport, food and manufacturing costs that would reverberate for years.

British neutrality in the Middle East conflict meant we were less directly affected by the oil embargo than other countries like America. But we were already struggling with high food prices caused by global shortages that fed into inflationary pressures, which would explode later in the decade. There was even talk of rationing, using coupons left over from the Second World War.

On the day before the wedding of Princess Anne and Captain Mark Phillips, Conservative prime minister Edward Heath declared a state of emergency. The use of electricity for floodlighting, advertising and for the heating of shops, offices and restaurants was banned. Oil companies were ordered to cut deliveries to private and industrial consumers by 10 per cent, petrol coupons were issued, a 50mph speed limit introduced, a heating limit of 17C imposed on offices and commercial premises and street lighting dimmed.

Soon, power cuts became a feature of life, with timetables for when the lights would go out published in the papers each day. Heath addressed the nation just before Christmas. “As prime minister I want to speak to you plainly about the grave emergency now facing our country,” he said. “We are asking you to cut down to the absolute minimum the use of electricity in your homes. In terms of comfort we shall have a harder Christmas than we have known since the war.”

From Jan 1, 1974 a three-day week took effect and a month later Heath called an election with the question “Who governs?” – only to receive the answer, “Not you, Ted.” Labour were returned to office but the shock of that period continued to shake the governments of Harold Wilson and James Callaghan, with national bankruptcy, rampant inflation and economic mayhem culminating in the Winter of Discontent.

It is a salutary lesson in what can happen when unexpected events combine with a lack of preparedness to inflict cataclysmic damage on the country. We have had one example already in the shape of the pandemic which came out of the blue. There were plans for dealing with such an eventuality but they were jettisoned in favour of lockdowns despite these never having been subjected to any cost-benefit analysis. They triggered the most precipitous fall in output for 300 years and racked up colossal debts that will not be paid off for a century.

The Government borrowed a total of £325.1 billion in the financial year to March, which amounts to 15.5 per cent of GDP, the highest percentage since the end of World War Two. Rishi Sunak finds himself in a worse position than Denis Healey in 1976, who famously had to seek a loan from the International Monetary Fund to keep the country solvent. The IMF attached conditions, including reductions in government spending, tax increases and rises in interest rates. Boris Johnson’s government is doing the second of these and may well soon be confronted with the third, but is resisting spending cuts.

Ministers are going out of their way not to sound alarmist and understandably so. They don’t want to spook the markets or hinder the recovery from the pandemic. Yet, as in the 1970s, matters are beyond their control. The high wholesale gas price may not come down any time soon and, while the UK has much greater diversity of energy supply than was once the case, a cold and windless winter would make their reliance on renewables look reckless. Freezing weather tends to be associated with high pressure systems which means the wind turbines will not pick up the slack.

In addition, there is concern that this winter will see a surge in flu cases combining with a rise in Covid to put severe pressure on the NHS once more. Ministers say they are 99 per cent certain there will be no more lockdowns, but if hospitals fill up, even with booster vaccines, the logic of what they did last time suggests that the Government will urge people to work from home again, avoid public transport, wear masks and keep apart from one another.

It is astonishing to think that 18 months after furlough was introduced there are still one million people on the job retention scheme. It is due to end next week, along with the £20 a week increase in the Universal Credit. Even though wages are going up, higher pay packets will be eroded by inflation, just as happened back in the 1970s when unions put in claims for 30 or 40 per cent rises. Pressure will grow on the Bank of England to put up interest rates to curb prices, though this will be resisted because of the wider impact on the economy.

Obviously the key economic indicators are less dramatic than then, when inflation was in double digits, no one would lend us money and the unions ran the country. But there is a worrying insouciance on show that recalls Jim Callaghan’s return from a summit in the West Indies in Jan 1979 wondering what all the fuss was about and generating that immortal “Crisis? What Crisis?” headline in the Sun.

If Boris Johnson’s famed luck runs out, this winter could be bad, even worse, indeed, than the lockdowns. Now, where did I put those candles?

Rishi Sunak is in a worse position than Denis Healey in 1976, who had to seek a loan from the International Monetary Fund to keep the country solvent