Energy: picking winners

11/10/2021

Yesterday, the Observer tried out a nursing crisis, writing of "tens of thousands" of nursing vacancies, while the Telegraph gave the airline pilot shortage a try-out.

But despite this and a wide choice of other crises, it was pretty obvious that there was only going to be one winner – the all-absorbing energy crisis. This has now taken pole position, engulfing yesterday's broadcast media and carrying through into today's national press, where it dominates many of the front pages.

What is giving the issue legs is the extraordinary behaviour of business secretary Kwasi "Modo" Kwarteng. While his boss suns himself in Zac Goldsmith's luxury Marbella villa, Kwarteng has been accused of telling fibs over the actions he is taking to assist embattled intensive energy users in gaining Treasury assistance.

As we left it yesterday, Kwarteng was promising to press the Treasury for help, having "heard loud and clear" about the predicament of so many key industries, and the urgency of their situations – with close-downs forecast for as early as this week.

Since then, the business secretary has let it be known that he has asked his team to help with work on an agreed list of proposals that could be passed on to the Treasury "in the next few days", and claiming that he was in discussions with chancellor Rishi Sunak.

This, apparently, has triggered a sharp reprimand from the guardians of the public purse, with one Treasury source saying it was wrong to suggest there were any discussions about potential support. "Kwasi was mistaken. The facts are that, to date, the Treasury and the chancellor have not been involved in any talks on this topic", the source says.

A chastened Kwarteng was then left to explain to Andrew Marr that he had made no commitment to any additional help for intensive energy users. He accepted that the situation was "critical", lamely suggesting that he was "looking to find a solution". "We already have existing support and we're looking to see whether that's sufficient to get us through this situation", he said.

Preceding Kwarteng on the Marr Show was Labour's Emma Thornberry. Her main contribution to the debate was to tell Marr that, "We need a plan", confining herself to non-committal responses when asked for detail.

Challenged directly on whether Labour supported a price cap on the rates charged to intensive users, she replied, "We are having meetings with industry". On whether Labour would support a shift of green levies from electricity to gas, the thrust of her answer amounted to "we need to have a proper plan".

Following on from Labour's Seema Malhotra on Saturday, and another Labour spokeswoman on the BBC's 6pm television news yesterday, both taking a similar stance, it seems that the opposition is deliberately playing a non-committal game, refusing to be drawn on what action they would have taken if they had been in power.

Although this hardly inspires confidence in Labour as a potential government, in strictly party political terms, this may make sense. Given the long lead times from formulating energy policy and delivery, there is very little the government can do in the short-term, other than throw obscenely large sums of money at the problem.

Should Labour support such a policy in advance, it essentially gives the government a free pass, and robs the opposition of the opportunity to criticise the government for closing down its own options, so that all it has left is to throw obscenely large sums of money at the problem.

Politically, the situation is potentially very damaging to the Conservatives, pointed up by a report in the Telegraph, one of the papers to devote its front page lead to the issue.

Here, we see reference to the Conservative Steel Caucus, an informal grouping representing a dozen Tory MPs with seats in the industrial North. This, we are told, is growing increasingly concerned about developments and is seeking an urgent meeting with prime minister Johnson – when he gets back from sunning himself in the lap of luxury in Marbella.

In an attempt to head off the concern among "Red Wall" MPs, steel minister Lee Rowley was reported to have held talks with some of the caucus members yesterday, although the outcome has not been disclosed.

One of those members, Andrew Percy - whose Brigg and Goole constituency includes Scunthorpe Steelworks and several chemical plants – addresses the question of whether industrial firms would be allowed to fail because of soaring energy costs.

This, he says, is a test of the Government's commitment to levelling up. "If the Government is serious about levelling up then people in the Treasury need to understand that much of the Northern economy is underpinned by heavy industry", he opines.

"It is no good pretending that we can bury our heads in the sand to this problem or pretend in some way that industry just needs to do more itself", he adds, suggesting that, "You can't level up if you end up levelling heavy industry in the North of England".

Percy accuses certain parts of the Treasury of being biased against heavy industry. "They are seeing it as something of the past. Nothing could be further from the truth", he asserts. "This is a very real problem that is in part of the Government's own making and therefore can only be solved with government intervention".

At least in this situation, the answer isn't more immigration, although the idea of throwing millions at ailing industries is doubtless just as unappealing – even if the consequences could be catastrophic.

What the government may quickly find is that, if key manufacturing industries are allowed to fail, it may be difficult to contain the knock-on effects which could impact heavily on highly visible areas of the economy. Already, iNews is conveying warnings that supermarkets may start rationing meat ahead of Christmas, without mentioning shortages of manufactured goods, apart from a recurrence of the carbon dioxide shortage.

But also at risk is a wide range of packaging materials, from specialist plastic films and containers, to carboard boxes and glass containers. Many of these are produced in huge quantities on a "just in time" basis, so shortages could very quickly impact on the food supply chain. These would extend way past meat products, and cover many commodity foods.

As a final insult to a much-put-upon public, suggestions from Downing Street that cash-strapped consumers might consider wearing extra jumpers to overcome their inability to pay for heat, has not exactly gone down a bundle.

This is redolent of the Thatcher days when junior health minister Edwina Currie suggested that old people who could not afford their heating bills should "wrap up warm". This was the same Edwina Currie whose view of northerners was that they died of "ignorance and chips", and who endorsed the decision to allow Jimmy Savile to head up a task force to run the Broadmoor psychiatric hospital.

Still, even if they are about to freeze, the countries' pensioners will be able to see their extremities turning blue and gaze upon their empty fridges. Asked by Marr, "Are you absolutely sure the lights will stay on this winter?", Kwarteng replied, "Yes I am".

It's a pity one cannot panic-buy electricity.

Also published on Turbulent Times.