The cost-of-living crisis is something that we need to address. I believe that the Government’s announcements in the Spring Statement are a good step forward in addressing it. However, there are underlying mistakes and lessons in how we have approached certain policy areas that we must now learn from as we move forward.
The most important policy area is energy. The UK price cap on energy, which in of itself is a questionable policy, is rising in the face of energy companies struggling to cope with the worldwide squeeze on energy supply. Legally required lower prices combined with spiralling energy supply costs have left many energy suppliers feeling the pinch. This in combination with some companies growing faster than they could actually afford has led to some of them collapsing. It has been estimated that the cost of Bulb collapsing for the taxpayer could be more than £2bn without even considering any knock-on affects on energy costs.
However, most of the energy prices rises are being caused by the ongoing damage that Covid-19 is dealing to the world’s economy with inflation rising sharply around the world and the cost of energy rising as well. We then have the additional cost shock of our sanctions on Russia following its unjustifiable invasion of Ukraine.
So, what could be we be doing better? Firstly, the Government needs to understand that we must invest in domestic energy supplies, so we are never again so affected by a hostile nation. One of the major aspects of this is reducing our reliance on any and all foreign energy and boosting our domestic production methods. The USA’s investment in fracking is one of the main reasons for its resurgence as an exporter of gas and a dramatic fall in its net import of crude oil. This has translated into far lower energy and other costs for Americans.
That is why it has always been so puzzling that the UK has consistently made the short-sighted decision to restrict, delay and finally outright stop fracking in this country. Fortunately, we have had the news that the regulator’s order to Cuadrilla to close our only shale gas wells has been withdrawn to give more time for evaluation. I don’t believe we need any more time to evaluate, expanding our fracking efforts is something that the Government needs to do now, and it should open the doors to it in the energy security strategy meeting next week.
Another energy supply that we have woefully failed to grow to its potential is nuclear. Despite minimal government investment in improving nuclear power and limited government appetite to expand our nuclear supply, it has always been and remains the best energy option to take us towards a less fossil fuel reliant future. Nuclear is the only clean energy supply that can be relied upon as “always on”. Even as public sector enthusiasm has remained low, private enterprise has not been quiet, with some exciting innovations having emerged recently – none more so than Rolls-Royce’s small modular reactors. We must look again at opening new reactors and boosting our domestic supply of energy.
In the short term, we can also look to further invest in our North Sea reserves and increase our output there to drive down costs in the UK. All the while, we should still be continuing to invest in renewables, but there are other options that are currently far more viable and likely to ensure that we have safe and reliable energy supplies in the future. Only by securing the long-term energy supplies of this country can we truly prevent the cost of living skyrocketing again.