As the Conservative Party confirmed Liz Truss as the UK’s new Prime Minister on Monday, think tank Onward has provided a five-point plan to tackle the ongoing energy crisis.
This will be a primary source of action for Liz Truss who promised to “deliver on the energy crisis” in her first speech as the new leader of the Conservative Party.
The first of the five-point plan calls for targeted financial support for households, calling for a replacement of the existing cost of living support scheme in order to integrate an expanded version.
OVO Energy similarly called for targeted support for vulnerable households within the company’s own 10-point plan to tackle the energy crisis.
Onward’s recommendation believes a new scheme should include additional payments to families with children who face extra energy costs. The revised scheme should provide £1,000 in support for every household, paid as credit on energy bills, plus an extra £1,000 for those on means-tested benefits.
As well as this, the government should provide £500 per child for those claiming child benefit, up to a maximum of two children, plus £500 for people with disabilities. Onward believes these payments should come in six monthly instalments paid during the winter months.
The second point asks the government to create a windfall tax on low-cost electricity generators in order to help pay for support. Onward claims that a windfall tax on these generators could raise between £4 billion and £10 billion per year to help pay for additional support for households.
Low-cost electricity generators include wind, solar, nuclear and biomass who have all seen profits rise due to marginal pricing of electricity. Onward states that if gas prices rise, these generators get paid more, even though their underlying costs haven’t changed.
Onward also believes the new Prime Minister should launch a serious campaign in order to cut energy demand, believing the government should be honest with the public about reducing demand.
To do this, an energy saving campaign should be launched for households and small businesses, an energy-efficiency obligation for landlords and housing associations should be introduced and energy-saving measures for businesses should be mandated, Onward said.
Onward also believes alternative fuel supplies should be increased, including coal and diesel. Despite the need to develop clean energy generation solutions, there is insufficient clean energy resources currently operational to cater for the British public. Because of this, Onward believes increasing the running hours of coal and diesel-fired generators should be explored.
This should include speeding up the issuance of new permits and potentially suspending some air quality rules in an emergency scenario. In doing so, Onward states this will reduce the risk of blackouts.
The final point calls on the government to keep energy flowing across borders in order to increase energy stability not only in the UK, but also in Europe to mitigate the risks of countries entering “energy nationalism”. This has been mentioned by the Green Party in its own plan to tackle the energy crisis.
In order to avoid shortages should energy nationalism occur, Onward believes the Prime Minister should use effective diplomacy to work together with its neighbours to tackle the energy crisis.
To do so, the government should establish a new “European Energy Emergencies Forum”, comprising the UK, the EU and Norway to set rules that ensure that energy can continue to flow through this crisis.
“The energy crisis will define the start of the new Prime Minister’s term in office. The challenges are huge, with high energy prices demonstrating that the UK is not immune from Russia’s decision to ration gas supplies to Europe,” said Ed Birkett, head of energy and climate at Onward.
“To get through the crisis, everyone will have to be pragmatic. The new Prime Minister will have to do some things that they won’t want to do or which are politically difficult, like a windfall tax on electricity generators or telling households and businesses to save energy this winter.
“Green campaigners will need to accept measures to diversify supply. And households will inevitably pay more. But with the right plan, there is a way through this crisis.”
The Onard five-point plan comes as Ofgem revealed in August it would increase the energy price cap to £3,549 per year for dual fuel for an average household from 1 October 2022.
The increase reflects growing concerns around the global wholesale gas market, with prices expected to surge in the winter months. High wholesale prices over the second half of 2021 and into the beginning of 2022 led to nearly 30 suppliers collapsing, along with Bulb entering Special Administration, since September.
