Western Morning News (Saturday)
Increasing our energy independence vital for future
OVER the past few months there has been a dramatic rise in the cost of energy, largely stemming from Russia’s senseless, unprovoked invasion of Ukraine. This has driven gas prices to record highs, put pressure on families’ budgets and made many worry that they will struggle to afford their energy bills this winter.
As the scale of the rise in the cost of living became clear Rishi Sunak, who was Chancellor at the time, acted swiftly by announcing £1,200 of support for the most vulnerable households. This included £650 for those on means-tested benefits, £300 for pensioners in receipt of Winter Fuel Payments and £150 for recipients of disability benefits. These grants will be on top of the £400 payment to all households later this year.
Rishi, whom I am supporting to be the next leader of the Conservative Party, has made clear that the best way to address the pressures on household budgets is through targeted measures. That is why he has already committed to scrapping VAT on energy bills for every family this winter and to announcing further support as needed.
An alternative approach has been put forward by Liz Truss, focusing on tax cuts funded through higher borrowing, and this has become a key issue for debate in the leadership contest. Many argue that cutting taxes in the current inflationary context risks driving inflation higher and repeating the mistakes Ted Heath made in the early Seventies. Inflation puts further pressure on household budgets; there are some forecasts that it could go as high as 18% early next year and this must be addressed. However, advocates of her approach point out that inflation leads to higher VAT receipts, which creates some scope for other tax cuts.
Meanwhile, Labour has put forward an unworkable proposal to try to regulate the price of energy. The problem is that gas prices are driven by global markets and the Labour plan cannot force businesses to provide energy at a loss, so they would
probably end up with energy shortages.
One of the lessons from this situation is that we must ensure we increase our energy independence in a sustainable way. In the short term, this means upgrading domestic boilers and improving the energyefficiency of homes. The Government is already taking steps towards this by removing the 5% VAT on energy-saving materials and launching the Boiler Upgrade Scheme to offer grants on low-carbon heating technologies.
It is also important we continue developing more renewable sources of energy such as wind power and nuclear energy. We must progressively move away from using fossil fuels if we are to guarantee that we hit our target of net-zero by 2050 and energy bills return to much more affordable levels over the next few months and years.
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