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Home›Czech Politics›‘She has no choice’: Liz Truss faces energy swing if she enters No 10, MPs say | Energy

‘She has no choice’: Liz Truss faces energy swing if she enters No 10, MPs say | Energy

By Gilbert Henry
August 27, 2022
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For months, everyone in government knew Friday was energy cap day, and at 7 a.m. the bad news hit. The phones rang as the nation woke up to confirmation from Ofgem that typical gas and electricity bills were set to rise by a chilling 80 per cent.

Millions of people would be unable to cope, charities said. Even low- and middle-income people who had savings could see them wiped out entirely. It was a total national crisis, although long predicted.

Consumer champion Martin Lewis roamed central London giving breathless interview after breathless interview, starting with BBC Radio 4 Today program at 7:30 a.m. Lewis appeared on 11 separate outlets before 2pm, raging over the government’s failure to act on his warnings, first issued in March.

But while Lewis was everywhere and Labor shadow ministers piled in unopposed, the government was nowhere. Where, the news producers asked, was Energy Minister Greg Hands? Or any other minister of the crown? Prime Minister Boris Johnson, back from his second summer vacation, or the Chancellor for at least another week, Nadhim Zahawi?

Hours earlier, Hands, whose responsibilities include retail energy markets, had tweeted that it was “great to visit Los Alamos National Laboratory here in New Mexico” where he had ” useful discussions” on nuclear fusion.

When asked mid-morning if Hands was back in his office, Department for Business, Energy and Industrial Strategy officials initially seemed unsure. Then they said he was going to Indonesia for a G20 meeting. This despite the fact that he had been spotted at the end of the morning in his department’s office between two flights, clearly without time to respond to calls for tenders from the media.

In the absence of the government, the Joseph Rowntree Foundation (JRF) released its own analysis showing that energy bills would exceed many people’s incomes to the point that paying them would become a “fancy”. It was, the JRF said, terrifying.

“In all my years, I haven’t double-checked an analysis as much as this one because it’s so staggering that it looks incorrect,” said Peter Matejic, the foundation’s chief analyst.

Greg Hands, the Minister of Energy, has been one of those absent from public view since the announcement of the price cap. Photography: Michał Wachucik/PA

“It’s impossible to think that a carer or salesperson will have to scramble to find hundreds of extra pounds to pay for their heating or that someone’s entire income for an entire year will be less than their energy bill But that’s what these numbers suggest will be the case unless further significant action is taken quickly.

The growing sense of national anxiety that Matejic has shared with millions, however, will not be addressed or mitigated for some time by whoever leads the country. There are still eight days until the name of the next prime minister is announced. Then, once Liz Truss or Rishi Sunak are in number 10, an emergency budget date should be set, options discussed and, eventually, choices made.

Friday morning’s events added to the growing sense that the six-week Tory leadership race has not only left a vacuum at the heart of power, but has been played out in a world quite removed from reality.

Not only did the search for a new Conservative leader and Prime Minister leave the government effectively in abeyance (initially the cabinet agreed not to make major financial decisions until it was completed, despite the cost crisis life), but the candidates’ desire to play to what they believe to be the viewpoints of the small conservative “selectorate” has made pragmatic policy-making impossible.

Truss, the big favorite, has spent weeks locking herself into potentially inflationary commitments to tax cuts, while pledging to avoid the “handouts” that everyone now knows are inevitable if those who need it the most should get the help they need with their energy bills.

Both candidates have also moved away from green solutions to the energy crisis. At several hustings, Truss won plaudits from conservative members by rejecting solar power.

But the reality is getting closer. Economists and MPs see the danger and say something will have to give. Paul Johnson, director of the Institute for Fiscal Studies, said Truss should deviate from some of what she said.

He said: ‘She will necessarily have to make substantial donations and she is committed to substantial tax cuts. This will clearly represent several tens of billions of additional borrowing, which will pose risks for the long-term stability of public finances and potentially for the short-term outlook for inflation or interest rates.

All governments are struggling to find solutions. But there is a sense of urgent engagement in the EU that the UK lacks. European governments are scrambling to find ways to protect households and businesses and the Czech Republic, which holds the rotating EU presidency, plans to convene an emergency energy summit to discuss price caps at the block level.

Many countries have already taken action. Spain capped gas prices for a year, halved VAT on energy bills and reduced another electricity tax to 0.5%, and taxed energy companies more, shifting the money to customers in need.

Italy this month approved a new energy aid package worth 17 billion euros, on top of the 35 billion euros earmarked since January for cost-of-living subsidies, and also aims to tax companies that profit from rising energy prices. Low-income people receive an additional payment of €200.

France has forced the electricity utility EDF to limit wholesale price increases to 4% for a year and to reduce its tax on electricity consumption from €22.50 per megawatt hour to €1 for households and €0.50 for businesses. Other individual aids are decided.

Germany adopted several energy-saving measures last week: temperatures in public buildings will be limited to 19 C from September and heating will be turned off in common areas such as hallways. The private sector is encouraged to follow suit.

Over the past two days, Truss has indicated that she will provide assistance as needed, but it will require a U-turn before she even becomes PM. David Gauke, the former Tory Treasury minister, said he thought she should announce tax cuts to save face, but said these would not provide enough help.

Indeed, he believes that after six weeks of saying one thing, she will have to do another, raising more questions about Tory leadership races in times of crisis.

“She’s trying to present what she’s going to do right now as very conservative, when I suspect what she’s going to end up doing is something that has a very substantial interventionist measure at its heart, which is not the kind of politics she wants to do but I don’t see that she has a choice.

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  3. Big power wants to withdraw NATO forces from Kosovo – EURACTIV.com
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