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To avoid a cost of living crisis, the new PM must focus on home grown energy

4 min read

The person expected to be PM on the 5th of September will face headwinds like few other PMs have experienced.

The size of the task in their first hundred days has not been seen since 1979, when Mrs Thatcher took over leadership of the country ravaged by strikes, Trade Union rule and an underperforming economy. 

The most prominent of the problems facing the PM will be the cost of living crisis. This is a real and immediate emergency in the literal sense of the word. Our concentration on generating green energy in preference to the energy available here in the UK – whilst importing expensive and arguably dirtier energy from places like China or those with links to Russia – is pushing up costs to excessive levels.  

Successive governments have taken the knee to a well-heeled, virtue-signalling left liberal elite, who have pushed a green agenda religiously, without regard to its consequences. This has led to a significant proportion of the population facing fuel poverty.

This need not be the case. The Independent Business Network of family businesses produced a report over 18 months ago calling for urgent action to change government policy towards the journey to Net Zero. The UK has chosen the most expensive route and we are now seeing the consequences of a monumental mismanagement of energy policy. The number one priority should be energy security, and particularly securing its cost. 

Britain has ample supplies of low cost energy, the rump of North Sea oil and gas and, more importantly, British Natural Shale gas beneath our feet which could be produced at a quarter of the price of the cheapest wind power. We could be entirely self-sufficient in energy, at low cost, which would not only serve consumers but boost our economy and prosperity. What is more, this would in fact aid the journey to Net Zero in 2050 by supporting competition. 

The refusal to make use of these resources, at least until we develop home grown nuclear supplemented by wind power, beggars belief. Very little of our energy is currently provided by unreliable wind, which on many days represents less than 10 per cent of our electricity production, while less than 25 per cent of our energy overall is provided by green energy sources. This means that we are importing and burning gas right now, at very high cost, when we could be producing our own at low cost.

It is even more absurd when considered in the context of climate change. The UK accounts for 3 per cent of global GDP and is already very green. If we became 100 per cent green it would only impact global economic output by 1 or 2 per cent, it would not move the climate change dial. By contrast, in an example of outstanding hypocrisy, we have exported to China, India and other carbon economies, the manufacture of many of the things we use on a daily basis. China is importing, not least from Russia, hundreds of millions of tons of coal to burn in order to make this stuff. 

We are exporting out-of-sight pollution, jobs and wealth, after all in our soon-to-be PM’s Yorkshire parlance; “where there’s muck, there’s brass” . 

To avoid catastrophe, even at this late stage, No 10’s new occupant must immediately put in train emergency planning laws to ramp up North Sea, kickstart shale gas extraction and start a major, home grown nuclear programme. 

Further, the PM should assist business by permanently cutting Corporation Tax, suspending business rates temporarily and reforming them for the medium to long term.

National Insurance rises should be reversed and income tax cut, perhaps with a short term holiday. Yet, on the other side of the coin, only the poorest should receive fuel poverty support: anything else will distort the market. We have to get real about low cost energy security and the real cause of our problems, the current orthodoxy of how to get to Net Zero. The next PM will win or lose the next election based on what she does about this in her first hundred days. 

John Longworth is an entrepreneur, Chairman of the Independent Business Network of family businesses and was formerly DG of the British Chambers of Commerce and Conservative MEP. 

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