The UK’s largest energy suppliers are seeking a government bailout as the rise in global gas prices makes itself felt in the British energy market. Bulb Energy is the latest relatively new market entrant to have to seek additional funding.
The cause of the problem is this: essentially, the game in the UK energy market is for suppliers to bet that the price they quote to you and me is more than the actual cost of providing the energy when the time comes for us to turn up our thermostats and switch on our lights. Add to that a number of new entrants to the energy market whose balance sheets are stuck firmly in the “speculate to accumulate” stage of their business development plans, and you have all the ingredients for a crisis.
Whether the government’s preferred solution ends up being bailouts, lifting the energy price cap, or creating some kind of energy supplier of last resort to avoid further contagion in the market, it’s hard to see how the result won’t be felt in the pockets of ordinary people at exactly the time that the £20 Universal Credit uplift is coming to an end, and at exactly the time that inflation may be returning to British shores in a significant way.
As I write in my profile of Keir Starmer in last week’s magazine, the Labour leader’s policy preoccupations have an unmistakable air of Ed Miliband. You can see how a crisis in the energy market exactly plays into two preferred Milibandite talking points: the cost of living and the shortcomings of British capitalism.
And the energy market crisis isn’t the only way that “events” may be conspiring to make the Conservatives’ difficult autumn trickier still. The British government, along with the Australian and US governments, is currently in a diplomatic stand-off with France due to the signing of the Aukus security and defence deal.
The French government is angry because, as a condition of the agreement, Australia has walked away from the multibillion-euro deal to buy its submarines from France. Defence procurement is one of the few tangible gains that foreign policy produces for domestic voters, and is almost always one of the most sensitive parts of any international negotiation.
For reasons of domestic politics alone, the French government – indeed, any government in its position – is going to have to make a lot of noise and a lot of fuss. When the dust settles, the reality is that Boris Johnson is wholly right to say that the British and French security partnership continues to be strong, indispensable and, indeed, actively involved in shared military deployments in Africa and against jihadism.
But the easiest way for the French government to make a show of displeasure that is seen by French voters, and felt in the corridors of power in the UK, is to provide even less assistance in responding to the people seeking to cross the English Channel for a better life in the UK.
You can easily see how events overseas conspire to produce a year in which heating bills are up, prices in general are up, take-home pay has been hit by the cut to Universal Credit and the rise in National Insurance, and the number of people crossing the Channel is also up. We could come to look at today’s problems in the energy market as the start of a new and much more difficult phase in the life of Boris Johnson’s government.