All year, ministers have been saying Britain does not have an energy supply problem. The problem is price, but supply from home and abroad is secure, it has been said whenever the government is challenged.
Or is it?
Norway announced today it may have to start rationing electricity exports this winter, to prioritise Norwegian domestic supply.
“For the first time in many years, we cannot completely rule out a period of electricity rationing in the spring,” warned Terje Aasland, the country’s oil and energy minister.
The UK relies on Norway for cheap hydroelectric power, which runs through a cable beneath the North Sea. But water levels in southern Norway have been unusually low this year – meaning electricity production is down 18% on last year. According to Aasland, the government may have to prioritise domestic consumers ahead of international customers.
The North Sea Link cable between Norway and the UK provides enough energy to power about 5% of British homes. It’s electricity supply in the frame now, but the UK also depends on Norwegian gas, for which there will be high demand this winter in Europe.
It all adds to pressure on the outgoing Johnson administration, and complicates the difficult task facing a new PM.
Warnings about the impact of the cost of living crisis on Britain’s poorest households are intensifying.
The Conservative party has “lost control” of the economy, Labour insisted today, after Boris Johnson rejected a plea from former PM Gordon Brown to recall parliament and pass an emergency budget. Brown – who was in power through the 2008 meltdown – urged Johnson to meet with both of the Tory leader candidates to agree on an immediate support package for those struggling to pay bills. But Number 10 insists that the PM will leave any further spending decisions to his successor next month.
According to the Child Poverty Action Group, without further support, over half of UK households will be in fuel poverty by the start of next year. In 2019-20, the figure was under 20%. What’s more, fuel poverty – defined as a household spending over 10% of net income on fuel – will soon affect almost 90% of single parents with two or more children.
Nightmarish forecasts predict energy bills will exceed £3,600 when a new price cap comes into force at the start of October – almost double today’s already record level. In January, the price cap could reach £4,400. Meanwhile, the oil and gas giant BP has just announced quarterly profits of £6.9 billion – its highest figure for 14 years.
So far, ministers have offered £400 to all households to help with rising fuel bills, in addition to boosting the winter fuel allowance for pensioners by £300. But for many, this will only cover a fraction of the extra costs.
Tory leader hopeful, Liz Truss, has said she will address spiralling bills “by lowering the tax burden, not giving out handouts.” She has also promised to scrap green levies on energy bills, while ruling out a windfall tax on the handsome profits of oil and gas giants.
Her rival has labelled it “simply wrong” to rule out further direct support for households, insisting her proposed measures favour large businesses and the better-off while leaving the most vulnerable out in the cold.
Aside from concern over whether either Truss or Sunak’s measures will go far enough, there is also concern that the leadership race is delaying action.
As Brown points out, if further support is only provided once we have a new PM, it will be too late to get benefits to people before October – when the dreaded price cap is set to rise once again.
It looks as though handling the energy crisis will make or break a new PM.
