Utility Week

12 | SEPTEMBER 2022 | UTILITY WEEK Policy Analysis Bills crisis demands action Whoever is crowned prime minister on 5 September, they had better have some answers ready to tackle soaring energy bills, or what is already a crisis could turn into a catastrophe. T here are no prizes for guessing what will be top of the new prime minister's in-tray when he, or more likely she, enters 10 Downing Street on 5 September. "The three things that are going to be in it are cost of living, cost of living, cost of liv- ing and cost of living: end of," says former Labour MP Mike Foster, riffing on his former party leader Sir Tony Blair's famous quote about education. Malcolm Grimston, senior research fellow at University of London's Imperial College, says that during the Conservative leadership debate he hasn't seen "any sign that there's a real understanding of the tsunami that's going to hit us". The former Tory councillor hopes that if Truss takes over as PM from Boris Johnson, she won't be trapped by her campaign rheto- ric on tax cuts. "Tax cuts don't help the most needy, certainly not much. We need to be targeting the resources very firmly on those who need it," he says. Foster, who is now chief executive of the Energy and Utilities Alliance, expects to see a volte-face by frontrunner Liz Truss, who dismissed help for poorer consumers as "handouts" during the campaign. "The writing is on the wall for what's going to have to happen on energy bills," he says. "It seems to me unfathomable that you won't end up in a world where bill payer support is roughly doubled for vulnerable households at least. "I hope that it's a day one thing, if not minus day 10 thing for the new leader." The new prime minister won't survive for long if they fail to tackle the bills crisis, even if that involves nabbing proposals by oppo- sition parties, Foster says: "If the new prime minister does not deal with energy bills as both direct and indirect causes of the cost of living crisis to the satisfaction of the vast majority of the public, he or she will prob- ably be out within 12 months. "Once you get to the 1 October, when the new price cap kicks in, if nothing has been done that's bold enough to capture the pub- lic attention, he or she's finished: it's as sim- ple as that. "If I am wrong, all bets are off of what that means for the political system." An economic shock The case for helping with energy bills, including non-domestic customers, is also a no-brainer in macro-economic terms, argues Kathryn Porter, energy consultant at Watt-Logic. "The economic cost of not acting is going to be large numbers of bankruptcies across many sectors," she says. "Small businesses are going to need support, possibly almost at the same level as the domestic market. We really don't want to see large numbers of small businesses failing because that's bad for the economy overall. "You've got to think in the long term. Our debt levels are not the highest in the G7 so we can borrow more – and to get through this period we probably need to." The costs of bill bailouts must also be seen in the context of the Ukraine crisis, which has fuelled increases in gas costs. "We might not be firing actual bullets at people but we're certainly in an economic war and you can make an argument that we're fight- ing a proxy war in Ukraine against Russia," says Porter. The "extraordinary" nature of the cost increases feeding through into energy bills means that the government must step in, she say. "Governments are there for these types of events, where individuals don't have the ability to deal with an issue that's way beyond their control. In the same way, gov- ernments looked at the public policy chal- lenge of Covid and brought in furlough. "For the vast majority of people, seeing an energy bill go from what was £1,200 a year ago to what looks like being in excess of £3,000 is just unaffordable and there's no sign of it coming down quickly in the future." Truss's campaign appears to be taking on board such messages with signals that her government would offer additional help to cushion bill payers from the looming increases in energy bills. Energy UK, in a letter to the chancellor, Nadhim Zadawi, has urged the government to "immediately commit" to extending the £400 support for all customers through the

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