A Conservative free-market approach is the solution to our energy woes

Theresa May’s decision to embark on the decarbonisation of the economy – so-called “net zero” – is now having disastrous implications for the cost of living. Back in 2019, ministers confidently claimed that the costs were relatively modest, and promised huge savings in certain areas that would reduce the financial pain. We are now seeing the results of that failure in our bills. The Government has responded to the Ofgem price cap increase with a range of inventive interventionist measures.

The Government and the usual green cheerleaders have blamed global pressures on gas prices for the mess we are in and cry for a further increase in reliance on expensive and unreliable renewables as the route to salvation.

While international prices are significantly to blame for this pain, if we fail to recognise that much of this is self-inflicted, then we won’t be able to find a way out of the current crisis.

The baffling decision to impose a moratorium on extracting our own shale gas resources and a broad refusal, with limited exceptions, to unlock North Sea reserves are cases in point.

Direct subsidies for renewable energy, along with other social obligation costs, now add an extra 25 per cent on to household electricity bills.

For some time this increase has been counteracted by low gas prices, but households have now been left hopelessly exposed as gas prices have risen and wind speeds have been below expectations.

It’s clear that using nuclear would provide much better protection but that solution lies a decade away.

These extraordinary own goals could have been avoided.

As Lord Frost has experienced working from the heart of Government, a rot has set in, brought about by an over-reliance on a narrow set of advisers and a narrow ideological mindset. This holds that nothing must be allowed to get the way of decarbonisation efforts, and anyone who questions this must be some sort of climate”denier”.

The Climate Change Committee (CCC) lies at the centre of this nexus, and it has been responsible for a large quantity of poor-quality advice.

Management consulting firm McKinsey claims the extra spending required to deliver net zero would be “equivalent to about 7.5 per cent of GDP from 2021 to 2050”.

That’s five times the CCC’s figure, which Parliament accepted when it decided to enshrine the net-zero target into law.

What would such a huge cost mean in reality? A prolonged squeeze on living standards seems likely.

The staggering rise in energy bills that we are seeing now could be just the start of an all-out assault on our prosperity, that sees living standards deteriorate for decades to come.

The alternative is to make sure that we make use of the extraordinary natural resources that we have under our feet and out to sea. By ending the incoherent shale gas moratorium, we could create 74,000 skilled jobs in the Red Wall. That won’t be enough on its own, however, to solve our current energy woes.

Consumers need urgent relief from spiralling prices. Relief from VAT and from the cost of environmental levies would have been a more elegant solution than the Government’s plan, but we also need to reform the energy market to get bills down for good. Affordability must become the priority, and it is a Conservative free-market approach that is the solution.

‘The staggering rise in energy bills could be just the start of an all-out assault on our prosperity’