THE UK’s energy crisis is the result of a “catastrophic failure of political policy” at Westminster, an expert has warned.
While the recent war in Ukraine has contributed to the soaring price of gas, there are warnings that years of botched energy strategies have resulted in bills which could reach an average of £7700 from April, according to the latest forecasts.
The Tory Government has been accused of a lack of action over the issue, with ministers failing to appear on TV and radio on Friday as it was announced the price cap would rise to £3549 a year in October.
With households and businesses facing crippling energy costs, it raises the question of how the UK has failed so badly on energy – which is the responsibility of the Department for Business, Energy and Industrial Strategy (BEIS) at Westminster.
Dr Sean Field, research fellow at the Centre for Energy Ethics at the University of St Andrews, told the Sunday National: “To put it bluntly – there is corporate responsibility in this, but this has been a catastrophic failure of political policy in the UK for the last 15 years.”
Energy prices began to rise around the world as a result of increased demand after Covid restrictions were lifted and normal life was resumed, placing pressure on supplies.
The Russian invasion of Ukraine has also driven prices up – so even though the imports from Russia made up less than 4% of the total UK gas supply in 2021, this has impacted the UK too.
But Field said the lack of storage for natural gas in the UK was a major issue when prices soar.
“We gave up what is called the Rough facility in 2017/18 – which gave up about 70% of the UK’s natural gas storage,” he said “So basically, we are almost on a ‘just in time’ system for natural gas from Europe to meet our domestic needs.”
He added: “That is a really bad situation to be in when, all of a sudden, natural gas prices go through the roof because we are dependent on that constant short-term supply.
“The knock-on effect is that even as of this morning, 67% of all energy in the UK, electricity included, was being supplied by natural gas and so when you put those factors together you get a very bad situation for UK residents.
“This is something that has been in the process for the past 15 years.”
At the time, Centrica, the owner of Rough which is off the Yorkshire coast, said it was not economical to repair the ageing facility without a subsidy. It has been reported there are talks with the UK Government over reopening it.
Field said: “The facility needed a bunch of upgrades, they asked the Government for help with those upgrades, the UK Government said no, and so they said ‘we are shutting it down’.
“So it was part of a corporate decision, but also a governmental decision not to support that Rough facility transformation.”
Field pointed to other failures, including not grasping the opportunity to make a “more diversified” energy mix in the UK and reduce reliance on natural gas.
“This is not going to be a short-term fix – we can’t fix this in the next few years, this is long-term that we should have been doing for the last 15 years which we haven’t,” he said.
“It has also been a political failure as we haven’t put in place contingency plans for a situation such as this, where we have rapidly rising wholesale prices adversely affecting the poorest working and middle- income households.
“As evidenced by the price cap, we don’t have an exceptionally low tariff scheme for the lowest income households. We don’t have support for the working and middle classes.
“And there is no policy to address what is really an income redistribution which is happening in the UK – where all of a sudden the largest oil and gas companies are making record profits, and meanwhile what we see is regular households becoming poorer and poorer.
“There has been no political thought in the Westminster Government towards this sort of situation and now it is scrambling to figure out what it is going to do.”
UK Environment Secretary George Eustice yesterday insisted people “don’t have long to wait” for news on what further action Boris Johnson’s successor will take to tackle spiralling prices.
SPEAKING to BBC Radio 4’s Today programme, he said: “We announced a package of measures in June which was a £400 rebate for everyone, and then additional support for the most vulnerable.
“Both candidates have said they will do more. You don’t have long to wait, there will be a new prime minister in place in 10 days or so.”
There have been plenty of advance warnings about the looming energy crisis. In July this year, the House of Commons’s Business, Energy and Industrial Strategy Committee published a report on its inquiry into energy pricing and the future of the energy market.
It called for the UK Government to “immediately update” its package of support to help households with soaring energy bills and to urgently set up a taskforce to help deal with the issue, saying it should be treated with “the same level of seriousness as the Covid-19 pandemic”.
The UK Government has two months to respond to the report and has said this will be issued “in due course”.
Professor Karen Turner, director of the Centre for Energy Policy at Strathclyde University, said the price rises now being announced were “not a shock”.
“It’s really disappointing to see an announcement coming out without there being a plan to say to people we are going to do something about it,” she added.
She highlighted the passing on of costs resulting from a series of supplier failures in 2021-22 through customer standing charges.
IT has been estimated this bill will be around £2.7 billion – equating to around £94 per household.
“That is quite different to, for example, how the failure of banks was dealt with in the financial crisis,” Turner said.
“We didn’t see that going onto our bank statements,” she added.
When it comes to the situation in other countries, Turner said there had been a widespread impact from the Ukraine war, but this varied depending on how energy is supplied and how people heat their homes.
“We are unusually dependent on gas heating – other countries might not be feeling so much pain as us as they are not so heavily dependent on gas, also because of how they get their energy. You have got differences in places like France, where we saw the gilets jaunes [yellow vest protests] and things like that – people made clear very early on they were worried about energy prices, there have been different policy approaches there.
“But France is very heavy on nuclear generating electricity and there is an element of state ownership there and there have been limits to profits and things like that.”
Turner said there had to be an “urgent stocktake” on how to stop energy prices rising in the UK, pointing out that businesses are not covered by the price cap.
She added: “It is a worldwide issue, but I think in the UK just because of the mix of factors, we are probably suffering more than most and our inflation is worse – the wider cost of living is worse.”
