For some months I’ve been writing in this column about the Cost of Living crisis. There is no question that we are now at the business end of its impact, with winter biting and colder weather upon us. It’s no consolation that much of the world is seeing elevated prices – for example, inflation here may be over 10% officially, but it’s higher in Germany and as much as 16.8% in the Netherlands.
That said, I am particularly conscious that we can bandy around figures as much as we want, but most people and businesses will simply measure this challenging period and its impact in a combination of anxiety and, in some cases, actual hardship. The combination of icy blasts and very costly energy is far from a good one. I totally understand why many will be worried about the weeks ahead; and that many readers who will be insulated, for one reason or another, will nevertheless want to know that the Government is doing what it can to help people – especially the most vulnerable.
What I can say with confidence is that the Government has put in place enormous levels of financial support to help households and firms with their energy bills this winter. Indeed, in the Autumn Statement we announced that support for domestic energy bills would continue for a further year. Of course, there is huge variation in how British people connect to energy – in South Suffolk many of my constituents use heating oil, and it will take a little longer to get that support out because of the lack of an existing database of such consumers.
Nevertheless, we have an Energy Price Guarantee that will save the average household around £900 this winter (according to the forecasts of the independent OBR) and be worth around £500 next year. It is worth stressing that this multi-billion pound support is in addition to the cost of living payments we have made to all households: £400 this winter, with significant extra funding for pensioner households, and those on benefits.
But I think every single person reading this column knows that, when it comes to energy support, the only long-term answer is to ensure that we are not dependent on Russian gas. We need to prioritise energy security. The good news is that we have made huge progress in this regard, with output from renewables up from less than 10% of electricity production in 2010, to more than 40% today. Indeed, our emissions have fallen faster than any other G7 nation. In addition, the Government has committed to new nuclear power at Sizewell in Suffolk, and whilst we have put in place a ‘windfall tax’ on North Sea oil and gas, there is a generous allowance to encourage investment in new supply – after all, such energy will still be needed in the transition to net zero.
Beyond that, there is much to be excited about in terms of future energy policy. On Sunday we heard news from the United States that may go on to be incredibly significant, regarding the future of ‘fusion’. Fusion energy is ultimately what powers the sun and offers the potential of an abundant and safe low-carbon electricity supply if it can be captured and harnessed commercially, and at scale. The recent breakthrough in the US concerned the apparent achievement of ‘net energy gain’ through fusion – i.e., producing more energy than went into the process.
So it was timely that last week – in my capacity as Exchequer Secretary to the Treasury - I visited the UK Atomic Energy Authority’s site in Culham, Oxfordshire where they are also harnessing fusion. It may be many years before fusion translates into a common day to day energy source, but what I witnessed shows that domestic investment into the technology – funded largely by Government investment in Research and Development – is creating a significant number of highly skilled jobs and apprenticeships in the here and now, spurring significant co-location from cutting edge energy start-ups. Let’s hope that proceeding with Sizewell can bring the same kind of opportunities to Suffolk’s economy.
I know that these are tough times for many, but I want to stress that the Government is doing what it can to help people through the coming months, whilst laying the foundations for long term growth and innovation. There is no magic solution to the global impact of Putin’s war, but better times will return. On that basis, may I wish you all a Merry Christmas and a Happy New Year.
Published by the Suffolk Free Press.
