Show Notes
Another day and another bit of sticky plaster is applied. With the highest industrial energy prices in the developed world, the government is increasing the number of companies that will get a bit off their bills in 2027. This follows other moves, like the £150 off customer bills. It will not be enough, given the sheer scale of the problems. The industrial crisis will go on; domestic bills are scheduled to go up and stay up for the next decade; new energy-intensive inward investment (e.g. for data centres) is being deterred; and where there are projects, own generation from gas is the route to firm power.
The facts are not changing, and it is getting ever more painful to ignore them. Climate realism means facing up to the relentless increase in the concentration of carbon in the atmosphere, the continuing 85% of the world’s energy supplies coming from fossil fuels, and the lack of any transition away from this, with the oil, gas and coal burn going ever up as the world energy demand looks set to double by 2050. Renewables on a system basis are not cheap. It takes 120GW now to meet the same peak 45GW demand, which 60GW once comfortably met, as well as doubling the transmission grid and adding all the extra batteries and storage. The renewables are not “home-grown” – the supply chains are foreign.
Britain is not on a path to home-grown energy. It is not cheap, and other countries are not looking to Britain as a “clean-energy superpower”. They look to Britain to find out how not to do it – no one else wants the highest energy prices. It’s not difficult to sort all this out, but more sticky plasters will make the situation worse and harder to fix the longer the government ducks the need for a fundamental re-set of British energy policy.
More from Helm Talks - energy climate infrastructure & more
Many voted to stay in the EU (including me). Rejoining the EU may sound simple, but the Europe Britain left no longer exists. With a string of major elections approaching and far-right nationalist parties surging across the continent, a future EU could be shaped far more by figures such as Le Pen (France), Meloni (Italy) and the AfD (Germany) than by the centrist consensus of the past. If a more Gaullist Europe emerges, one of the biggest obstacles to re-entry may be a simple question from Brussels, Paris and other capitals: why would they want Britain back?
Britain faces a crisis of delivery. From nuclear power stations to airport runways and water infrastructure, costs have spiralled and timelines have stretched into decades. How has a major modern economy become so incapable of building what it needs? From amongst the most expensive nuclear power stations in the world, to huge costs for airport runways and the absurdities of the HS2, Britain is an infrastructure basket case. This matters not least to ensure that the economy can grow, as the politicians keep talking about.
As oil prices continue to fluctuate in global markets, Britain’s energy costs have become a distinctly British crisis. They cannot be explained away as a temporary consequence of global events. Industrial electricity prices continue to be among the highest in the developed world, consumer bills remain high, and there is little prospect of relief even in the longer term without a fundamental rethink of policy.
Recent prime ministers have become very good at the politics of the long grass, and Andy Burnham is at risk of following this line. Promise the big things: growth, clean rivers, better defence, cheaper energy, new nuclear, decent transport and social care. Then push the hard choices beyond the next election, offer short-term palliatives, and hope that someone else will eventually pick up the bill. The result is not merely delay; such an approach actually results in higher costs in the long term, weaker infrastructure, and yet another obstacle to the growth that he, and many of his predecessors claim to want.
Following on from the latest change of Prime Minister and announcements about his new Cabinet, what is going to change? Andy Burnham has a new ten-year plan, and is promising a fundamental revision of politics, but Britain’s deeper economic problems remain unresolved. The fact is, underneath the headlines, the country is still trying to live beyond its means, with high borrowing, weak growth and rising debt interest putting serious pressure on its public finances.