Show Notes
The news is very much about gas price shocks, but this is to misunderstand the fundamental difference between temporary shocks and long-term trends. Gas prices spike when major geopolitical events occur (e.g. Russia’s invasion of Ukraine or the blocking of the Strait of Hormuz), but then often fall sharply afterwards. Such fluctuations are nothing new and should be expected, but they don’t prove that gas is inherently unstable or that the UK can simply “get out of gas” by relying more on wind, solar, and some nuclear. Despite two decades of expanding renewables, the UK still depends on gas for about 35% of its energy, with heating and industry making full exit impossible anytime soon.
At the same time, the UK is not making good use of its own North Sea gas. Current policy effectively discourages domestic production through limited licences and heavy windfall taxes, while simultaneously encouraging imports, even though imported LNG is more polluting and exposes the UK to foreign supply risks. The claim being made that domestic gas always has to follow world prices is misleading – long-term contracts once gave the UK stable, predictable gas supplies, and could do so again, if the government required such contracts as a licensing condition. Moreover, the UK’s energy system is more exposed to global gas prices than other countries because electricity prices feed gas costs straight through, industrial electricity prices are the highest in the developed world, and the UK has very little gas storage. A more balanced, practical approach is essential to manage the gas we will inevitably continue to use, to prioritise domestic production over polluting imports, and to build proper storage and contract structures that improve security, environmental outcomes, and industrial competitiveness.
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.