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3 April 2022

Could the UK introduce energy rationing?

Faced with a worsening energy crisis, ruling out any measures is politically risky for the government.

By Freddie Hayward

The shadow business and energy secretary called for the government to prepare for the possibility of energy rationing in an interview with the BBC this morning (3 April). Jonathan Reynolds said that while rationing “should be an extreme option”, “we should be making those plans and the government should be preparing, not necessarily in public, for that situation”.

Grant Shapps, the Transport Secretary, quickly rejected the suggestion. Even Reynolds’ support for rationing was short-lived. He went on to tell Times Radio there shouldn’t be rationing and it “would be a disaster for households and businesses”.

Despite Reynolds’ confused messages, the question of rationing points to a more fundamental problem for the government: the possibility of the energy crisis worsening even further. The reason rationing has entered the political debate is Germany’s decision this week to trigger emergency plans that could eventually lead to the rationing of electricity. Faced with Vladimir Putin’s threat to restrict the supply of oil, Germany has said that households and critical infrastructure would take precedence over businesses. If the Russian president followed through on his threat, which is far from certain, then energy prices would probably rise even further than they have already.

[See also: How phasing out Russian oil could deepen the cost-of-living crisis]

On top of this volatility, the increase in the UK energy price cap to £1,971 on Friday (1 April) and the prospect of a further rise in October represents a much more immediate problem for the government. The government’s much-delayed energy security plan, which is due to be published this week, will set out plans for new nuclear power plants and an increase in wind power production.

That’s all very well, but a nuclear power station in the future is not going to help energy prices today, which are a major contributor to what is forecast to be the worst fall in living standards since records began in 1956-57.

In 1973 Ted Heath’s Conservative government introduced a three-day week to conserve electricity in the face of industrial action and an oil embargo. It was a form of rationing. While, compared with Germany, the UK imports only a small amount of energy from Russia, it is still beholden to increases in the wholesale price of energy. Rationing would be a radical measure, but given the volatility of the energy market ruling things out now could prove politically risky for the government.

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