Here’s something which will likely be universally unpopular: The government shouldn’t do anything to subsidise energy prices. I say this in the face of a £700 or so increase on annual bills announced today. And this is just the beginning, because, as Nils Pratley at the Guardian points out, when the price cap is raised again in October, it will add a further £300 to bills – just in time for next winter.
To be clear, I am not arguing that millions of households should be left to choose between heat and food; I am merely pointing out that there are better and more effective ways of alleviating poverty than bailing out a private energy industry which is the victim of its own past follies. Rather, I agree with Torsten Bell from the Resolution Foundation, who told this morning’s Today programme that the best way of addressing poverty is through increases in the benefits system. Restoring and adding to the £20 a week cut from Universal Credit and the triple lock on pensions would be by far the most effective way of alleviating fuel poverty.
The energy side of the crisis, however, requires sweeping restructuring which goes well beyond anything the government or the opposition are currently prepared to countenance – not least because the economic models they operate on are so out of step with the real world that they fail even to understand the problem, still less offer a workable solution.
Why the energy cap failed
The state-imposed energy cap, which is the focus of establishment media attention today, was always the wrong solution to the wrong problem. As I explained four and a half years ago:
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