Minor tax cuts won’t save Britain this winter, but a revolutionary energy policy could

A VAT cut? We’ll take it. A pause in the “green levy”? Why not? Chuck it all in. It doesn’t move the dial much, but that’s never stopped Westminster before.

There is more than the usual air of unreality about the leadership debates this time around. While Liz Truss and Rishi Sunak stand on stage blaming one another for the coming recession (handy clips for Labour in 2024), the real culprit, Vladimir Putin, is playing havoc with Europe’s energy markets. Will he turn the gas back on or won’t he? It’s the only question that matters for the thousands who could freeze to death. But never mind about that. The BBC wants to talk about Mr Sunak’s shoes.

Let’s talk about his shoes, then. Apparently they cost £450. The energy price cap is now forecast to double to 8.5 Sunak shoes per year in January (or 855.5 Truss earrings, to use her supporters’ preferred measure). The price cap has already nearly doubled this year. These are charts that would make Chris Whitty proud.

The bottom line is that the country is getting poorer, fast. The current discussion over taxes, pay, welfare, inflation and interest rates is largely a debate over how to share out this impoverishment. What we need urgently is a strategy to slow and then reverse it.

There are few quick fixes. Fracking and increased North Sea production on a scale needed to affect prices are years away, as is new nuclear generation. We can make the most of what we already have, however.

The first priority ought to be an emergency home insulation scheme. Some councils are scraping together money here and there to retrofit buildings, but nothing like on the scale needed. The Government ought to set up a fully-funded taskforce to get a significant portion of homes done by September and scale up from there. Yet, I am told that initial proposals to do this on a national scale earlier this year went nowhere because of a “lack of interest” from No 10. This is pure negligence.

The second make-do measure should be an urgent mission to rebuild the country’s gas storage capacity. When the Rough gas storage facility was shut in 2017 it took with it 70 per cent of our UK gas storage. In its wisdom, the Government thought it would never be needed. This spring, National Grid was forced to get permission from regulators to halt gas imports because our pipeline network is too full and export pipes heading to Europe can’t take any more. This is in the midst of a global gas shortage.

If the UK still had enough storage capacity, we could be filling up empty gas reservoirs with gallons of the stuff to help get us through the winter. The chief executive of Centrica said this week that he is in talks with the Government over reopening Rough before the winter, at a cost of £2.4 billion. But Rough is not the only empty gas reservoir lurking under UK soil and sea; there are dozens more. The Business Department should be pulling out all the stops to expand or reopen them to relieve the infuriating traffic jam in our gas network.

Beyond that, we ought to be leading the rush to sign new long-term contracts for gas, rather than having to pay whatever the price is on the day. Thanks to a longstanding, British-led policy mistake, most of Europe now buys its gas at “spot” – the current price – instead of signing 10-year contracts at a predictable price. The only way to defray the appalling prices we’re now seeing is to go back to these more stable contracts.

The German energy company EnBW recently started to do exactly that when it signed its first ever long-term gas contract with a US supplier. There are potentially similar opportunities to pursue in Qatar, Algeria and Australia. The UK should be front and centre of this new dash for gas, rather than being mired in irrelevant nit-picking over net zero. Whether climate activists like it or not, gas will form a critical part of our energy mix for decades to come. If European governments had been honest about this earlier, we might not be in our current predicament.

Meanwhile, the entire process for pricing energy in this country needs a redesign. Currently, we operate a system designed for old-school gas and coal suppliers, whereby producers are paid the highest price available for power. Observers have been warning for years that this means consumers pay through the nose when they don’t need to. The Treasury finally began a review of the system in May. It’s unclear whether anything can be sensibly changed in time for this winter without causing chaos, but it could surely begin a healthy overhaul of the market before the election. Better late than never.

The truth is that this is going to be an ugly year. Whoever is leading it, the Government will, I predict, soon be reaching into its coffers to give poor households more help over the winter. Even if she baulks at the cost of more welfare, Ms Truss may decide it is necessary to protect the consensus over the war in Ukraine.

What’s astonishing, however, is that there have been no concrete proposals put forward by the Government, or either leadership candidate, as to how they will avoid a repeat of exactly the same scenario next year. Even worse, the current lame-duck Government seems content to waste a whole critical summer doing nothing. Why is there no emergency plan for insulation? Why is no one talking about how we store and secure less expensive gas as quickly as possible? Has the Government gone on holiday?

We are watching debate after debate in this leadership contest, in which the candidates bicker over taxes, inflation and “supply side reform”. Yet, not once has there been a serious discussion of the actual supply of energy and how to expand it as quickly as possible.

It is the skyrocketing cost of gas that is driving us towards recession and stoking inflation. Until Mr Sunak and Ms Truss have something cogent to say about that, all they are doing is arguing passionately over how to slice up a fast-shrinking pie.