Richard North, 10/10/2021  
 


I have made up my mind that am bored with the phony war over the Northern Ireland Protocol, and have completely lost interest in the posturing of both sides. Thus, I'm not going to report the progress (or lack of it) until something substantial actually happens – although one does sense that things may soon be coming to a head.

That said, there is something of a phony war feeling about most issues at the moment. Although the most of the now familiar crises remain unresolved – apart from the so-called "fuel crisis", which seems to have dropped out of the headlines - there is very little new to sustain the high level of drama that we've grown used to over previous weeks.

You can always tell this from the print media's headlines. They are all over the place, with no consensus as to what is the main issue of the day. Each paper is ploughing its own furrow, determined to follow its own path to glory – but unable to avoid conveying a sense of anti-climax.

Meanwhile, Johnson has buggered off for a "sunshine break" in Marbella, much to the disgust of the Mirror, which reports him staying in a luxury villa until Thursday – presumably with his current family. Only later will we find out who paid the bill.

That leaves his hapless ministers holding the fort. But, as they seem to be adopting Johnson's crisis management technique – of denying that there is a crisis and doing absolutely nothing about it – we can't expect any significant policy initiatives over the next few days, Northern Ireland notwithstanding.

If there is any one of the exiting crisis collection at the top of the agenda, though, it is energy, but only because precisely nothing has happened. This certainly gives it pride of place on the BBC website which is featuring the plight of business users, who do not benefit from the price cap mechanism which protects domestic consumers from eye-watering bills – albeit only in the short-term.

The British Chambers of Commerce, says the BBC, has called for a similar cap to be introduced for the energy bills of small and medium sized businesses - those with 250 employers or fewer. These firms mostly buy their energy several years in advance, so those whose contracts are due for renewal now are facing a "difficult time".

Claire Walker, the BCC's co-executive director, is cited by the BBC saying that the increasing pressure on these sized businesses was "becoming dire" and said that a price cap would give them the confidence to maintain normal business activities.

On the other hand, Dave Dalton, chief executive of British Glass, thinks that this is probably "too little, too late". He argues that an "immediate intervention" is needed, although the exact nature of this intervention is not specified.

On its 6pm television news bulletin, the BBC sought to get some idea of Labour's ideas to resolve this particular bit of the crisis, interviewing Seema Malhotra, the shadow minister for business and consumers.

In an excruciating exchange, however, Malhotra insisted that there should be a "plan" to deal with the crisis while refusing to specify any detail at all. No matter how bad, Kwasi Modo might be, he can rest assured that Labour is infinitely worse – which is a very large part of our problem.

The Independent on Sunday is very much more forthright, warning energy-intensive manufacturers of steel, glass, ceramics and paper are "days away’ from halting production", unless something is done about soaring wholesale gas prices.

Andrew Large, director general at the Confederation of Paper Industries, confirms that there are "serious risks" of factory stoppages because of the price of gas is too high to bear. He warns that this would create a knock-on effect through the supply chain into consumer retail.

Gareth Stace, director-general of UK Steel, says: "If the prime minister and government does nothing to help us, they could start to strangle steel production here in the UK and rather than working towards a high-wage economy, we will actually be walking blindly towards a low-wage economy".

There is a European dimension to this as well. UK steelmakers are paying 50-80 percent more for electricity than German producers. "At the moment, there’s an energy crisis", says Stace. "If government does nothing, there'll be a steel crisis. In terms of what impact that could have on jobs, that wouldn't be good not only for the steel sector and for those regions where there is steel but for the UK economy as a whole".

But if Seema Malhotra has nothing on offer, the government's actual response seems to be worse than nothing. It is pushing ahead with plans to shift the burden of subsidies for electricity renewables into a gas bill levy, ostensibly to fund the transition to "low carbon" heating.

According to The Times, though, one of those anonymous government sources has dismissed the plan as "madness". Downing Street, he says, is failing to appreciate "the reality of the problem we're facing with energy prices". He adds: "There is still a sense that we just ride it out and it's better in a few months' time. But it's very clear that it’s going to get worse before it gets better".

This sentiment is reinforced in The Sunday Times today, in a piece that discloses that Britain’s biggest steelmakers tried to warn Kwasi Modo about the pressures facing the industry at the end of last month.

But, we are told, far from reacting positively, the business secretary came across as "blasé", telling bosses - including representatives from British Steel, which operates the Scunthorpe plant, and Tata, which runs the Port Talbot site in south Wales - that soaring gas prices were a "blip" and that the weather would soon change, helping wind turbines generate more power.

Last Friday, the business secretary also began a meeting with representatives of energy-intensive industries such as chemicals and glassmaking on a similarly relaxed footing. But, this time, he quickly changed his stance when they warned him that factories would start closing or slowing production within weeks.

Gareth Stace recalls that, by the end of the session he was promising to press the Treasury for help. "He heard loud and clear about the immediate pressures facing the sectors and how the damage is going to rapidly escalate if the government does not do something quickly", says Stace.

The Sunday Times says that steelmakers want ministers to intervene in the energy market and provide wholesale electricity at a "competitive" price, which UK Steel estimates would cost £1.5-3.9 million a week. They also want the government to drop various carbon and network charges imposed on steelmakers at a cost of about £50 million a year.

Others called for a price cap to protect business energy customers, on the same lines as the British Chambers of Commerce proposal. The outcome of the meeting, we are told, was basically, "We need to get cracking now on solutions that we can start to agree on and convince the Treasury of within days rather than weeks".

And yet, only a few days ago, we learnt that the UK regulator had rejected Royal Dutch Shell's plans to develop the Jackdaw gas field in the North Sea, ostensibly on environmental grounds.

From this and other developments, there are indications of an as-yet undeclared policy emerging. It seems the government is intent, through shortage and addition of "green" taxes, to price gas out of the energy equation. Unable to make renewables competitive, its strategy is to make fossil fuel alternatives unaffordable.

The result, as Gareth Stace observes, will be that "we will actually be walking blindly towards a low-wage economy". But, in its schizophrenic approach to policy, this government doesn't seem to care or – equally likely – is simply incapable of engaging with reality.

Thus, while the Mirror may be throbbing with indignation at Johnson buggering off on holiday, the real pity is that, someday soon, he will be coming back.

Also published on Turbulent Times.






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