The prime minister seems to be suffering from a dangerous degree of complacency in the face of the mounting energy crisis. If he is not careful, he too may gain the unfortunate image of being out of touch that attached itself to another Labour prime minister, who came to office a half century ago – James Callaghan, whose reaction to widespread industrial strikes in the bitter winter of 1978-79 led to the infamous newspaper headline, “Crisis, what crisis?”
It was a misquote, but one that stuck because of the sense of a lack of urgency and grip that surrounded the government of the day.
Now, as governments around the world are implementing measures to conserve fuel stocks and support families and businesses, Sir Keir Starmer has merely urged the British people to “act as normal” – in the middle of the biggest disruption to the oil supply in decades, if not since the Second World War.
This is despite companies making clear to the government that there could be fuel shortages within days. Sir Keir’s official spokesperson said the UK has a “resilient and diverse” supply of fuel: “We will always plan for all eventualities. Fuel production and imports are continuing ... Petrol stations in the UK are well stocked nationally, and any suggestion otherwise is incorrect.”
“Crisis, what crisis?” indeed. Such languor is inexcusable as families and businesses fear for the future.
The price of fuel oil, so vital to rural communities, has doubled in a few weeks, as has the cost of aviation fuel, which will ramp up the price of holidays. Gas and energy bills are bound to rise by an as yet undetermined amount come the autumn. We already know that interest rates may have to be pushed higher, as price inflation once again outstrips wage increases. Petrol and diesel prices are seemingly inexorably headed for £2 per litre.
All this against a backdrop of stagnating living standards – along with a succession of tax rises on work and employment, after Labour repeatedly denied, during its general election campaign, that these would be necessary.
In that dismal context, it is incomprehensible that the chancellor, Rachel Reeves – herself running badly short of political capital – has, at the time of writing, refused to cancel a planned increase in fuel duty of 5p per litre in the autumn. It is so obvious that the decision is inevitable, and so easy for it to be made, that her failure to act – which has allowed her to be politically outflanked by her opponents – is rather mysterious.
The cost to the Exchequer of postponing the rise in September would be around £400m. That is not a trivial sum – but it has to be looked at in perspective. The state takes a total of £24bn a year in fuel duty, and the government is already automatically taking in higher VAT receipts as a result of fuel being more expensive. For hard-pressed families for whom a car is essential, and for smaller businesses especially, announcing a postponement of the increase until conditions return to normal would be an important symbolic move, as well as offering a little financial relief.
In other words, postponing or cancelling the 5p-per-litre increase would yield a disproportionately generous political benefit for little material net effect on the public finances. It is, in that sense, an echo of Ms Reeves’s foolish decision to cut the pensioners’ winter fuel allowance in her first days in office, which raised relatively little to help fill the “black hole”, but dealt a political blow to Labour from which it is yet to fully recover (even though that decision had to be partly reversed).
Other governments around the world are currently implementing innovative measures to save energy and build public confidence. The Australians are making some public transport free, the Irish have already cut duty on fuel, and many countries are building up stockpiles. In Britain, meanwhile, the government is silent on fuel duty, and on the detail of any plans it might have to ameliorate prospectively crippling gas and electricity bills later in the year.
The response of the prime minister and the chancellor to these new challenges has been disappointing, and they have fallen behind the opposition parties. No government with the capacity to take action and the levers of power at its disposal should find itself in such a position. It needs to seize this agenda. Yet thus far, activity has been mostly confined to convening meetings, including emergency Cobra sessions.
There is nothing wrong with that – indeed, it is essential that preparations are coordinated, businesses are listened to, and petrol retailers are duly warned about “price gouging” – but there’s been little action. Some very limited, albeit welcome, help for people on benefits who use fuel oil has been forthcoming, but not much else beyond platitudes.
Actions, not words, are what’s needed. When shall we see them?
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