YesA power shake-up doesn’t just raise our electricity bills – it can revolutionize how our economy works. The UK responded to the energy crisis of the 1970s by modernizing its energy system and doubling down on its North Sea oil extraction. Investment poured in and the UK became an energy importer. When energy security is on the line, deep states take action on a large scale. Today, as the war with Iran continues, fracking the North Sea for its last planet-warming fuel is no longer the answer. If the UK is to deal with future shocks, we need to build a clean energy system for the next generation.
A supply shortfall of 10m barrels of oil per day and a fifth of the global natural gas (LNG) trade is already having major impacts around the world. The UK is highly exposed to international gas prices. The public expects inflation to rise, the market predicts a rise in interest rates next year, and the cost of some government loans has risen to levels not seen since the financial crisis of 2008. This is what the movement of fossil fuels looks like for a country dependent on imports, and it will not stop the energy. UK food prices are already on the rise, up 3.3% in February, and we may see the highest food prices in three months.
There is one hard truth: the fossil fuel giants will not save us. A new report shows that hundreds of North Sea licenses issued by UK governments since 2010 have produced just 36 days more gas. Officials rarely want to leave the system that brought them to power. This is why BP has openly turned back to oil and gas to build investor confidence, while Shell has kept its massive buying machine running. It’s time to realize that when you find yourself in a hole, you have to stop digging.
We also need to stop using gas to set the price of electricity for every energy source. This is important because as we move towards more renewable energy, gas will continue to play the role of a backup generator when wind and solar power is low. It needs to be managed and paid for as a backup and not a mainstay of the UK grid. Recent work from the University of London and Common Wealth points to an efficient way where gas companies are paid a fixed or regulated price, avoiding the volatility of the main market.
But market change is not enough. People need protection from important things. That means an important guarantee of energy: a basic group of energy for every house at a stable, affordable price, and the market rates work just above that level. Similar packages were used in Austria, the Netherlands and Poland after the energy crisis of 2022. This is a more appropriate and reasonable response than the UK solution after the invasion of Ukraine: a blanket in the form of energy purchase guarantees. In addition to this, the costs of social and climate policy should be completely removed from electricity bills and added to the general tax – which would save £100 for the average family. These things will not only protect those who are struggling to get heating money but will also reduce the price increase.
The UK also needs an essential food guarantee: a protected basket of basic goods sold at low prices, stable for a defined period, supported by long-term prices and direct support for farmers and food businesses that produce those essentials here at home. France tested this back in 2023. The UK already produces more than 60% of all food consumed here, and the government has said it wants to buy public goods to do more to support UK products. Britain is not on the verge of producing too little food overall, but it is highly dependent on imports for essential foods – including fruit and vegetables and staples such as rice – as well as farm inputs (for example, fertiliser), and a seasonal supply chain that is less resilient to shocks.
The long-term answer to reducing debt and strengthening our national security, of course, is to power our lives with renewable energy. The effect of record wind in the UK this year has already helped to reduce gas supply and reduce the rate of rise in gas prices. At the same time, retailers are reporting increased interest in solar panels, batteries and heat pumps as households look for ways to protect themselves from global warming. This rise should come as no surprise, as driving an electric car using smart charging can save you over £1,000 a year based on current petrol prices, and solar power on your roof can save you over £750 in electricity. At my home, a solar panel with smart batteries means my electricity bill for March is a grand total of £1.14.
But these savings only matter if people can get past the initial cost barrier. That’s why we need government-backed electric vehicle leasing, as well as interest-free loans or investment-type financing for solar, batteries and heat pumps.
This also applies to major upgrades. Wind and solar are expensive to build upfront, especially in this era of rising interest rates. The Government and the Bank of England should work together to push for a two-rate policy: one rate for the wider economy, and cheap money, aimed at clean energy, grids, storage and industrial electricity. China’s central bank already provides special funding for carbon reduction loans, and the Bank of Japan has used interest-free climate loans for years. They show that when the country decides that something is important, the bankers and the treasury can work together.
The UK doesn’t need another lesson on how exposed we are to global energy shocks, but we’re getting one. The 1970s showed that strong crises can remake a country. The question for us today is whether we can take this as an opportunity to protect people’s livelihoods and build a clean, secure energy system for decades of uncertainty.
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