The government must act now on energy prices

Editorial: This is a wake-up call about the nation’s immediate public health, and it should also be a wake-up call about the need for clean and affordable energy in the future

3 January 2022 (Brian Adcock)

The government must act on energy prices. The warm spell over the new year holiday may have pushed soaring gas prices into the background, but the potential threat to the health and wellbeing of vulnerable people remains.

The charity Age UK has warned that many pensioners may switch off their heating in order to hold down their bills. Its chair, Baroness Altman, intends to write to the government this week to demand action. She said: “The problem for pensioners is that not being able to keep warm costs lives. We’re not just talking about being a bit strapped for cash. We’re talking about health deterioration or death.”

This is a particular issue for elderly people, who Age UK recommends should keep their bedrooms at 18C and their living space at 21C. But it is also vital that young children should be protected on cold nights. The NHS guideline is that their bedrooms should be between 16C and 20C.

There is every prospect that prices could rise by a further 50 per cent through the winter. The chief executive of Energy UK, Emma Pinchbeck, described the situation as a “nationwide crisis”. She is right.

So too is Ed Miliband, shadow secretary of state for climate change and net zero. He said: “Working people are being hit by a cost-of-living crisis which has seen energy bills soar, food costs increase and the weekly budget stretched. The government must take urgent action to support those people struggling to pay bills.”

So what is to be done? It is important to distinguish between the short term and the long term. The price of gas is set globally, and the UK imports half of its gas requirements. So if in the next few months the gas price does indeed soar, the onus will be on the government to protect those most at risk.

In meetings before Christmas, the government, the regulator Ofgem and industry leaders failed to agree on action. Further meetings will take place this week, and the country should hope that a few days’ break will have brought a sense of clarity to the negotiations.

There are three things the government can do immediately. One, suggested by the shadow chancellor Rachel Reeves, is to scrap VAT on home energy bills. This could be done at the stroke of a pen, just as VAT was cut for the hospitality industry to help it recover from the lockdowns. The “eat out to help out” scheme has been criticised for wasting public money, but it did indeed help out. Surely helping people keep warm though the winter is as important as keeping pubs and restaurants in business?

The second is to extend the existing winter fuel payment scheme, where people born before 26 September 1955 can get between £100 and £300 to help pay their heating bills. Those who get the state pension, and most in receipt of other social security benefits, automatically qualify. The scheme is not perfect, but it is administratively easy to use such an established mechanism to combat fuel poverty. Again, this can be done at the stroke of a pen.

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The third action needs the cooperation of the power industry. Energy providers have schemes to help people who are unable to pay their bills – a typical bill will explain what people who cannot pay should do. Here is something, again, that already exists, and can be developed to cope with the emergency. The challenge will be to make sure that those most in need do indeed get it. The government can help by funding in part any additional costs that are incurred by the industry.

Beyond these immediate measures, the government also needs to think about the long term. Its drive to shift to a low-carbon economy is admirable and deserves support. Any measures to reduce energy bills in the short run should not divert it from that longer aim. But the emergency this winter should make it all the more determined to ensure not only the security of energy supplies, but also that energy is supplied at the lowest cost that is technically feasible.

This is a wake-up call about the nation’s public health right now. It should also be a wake-up call about the need for clean and affordable energy in the future.