Energy price reacts: Scale of action is laudable but ‘morally indefensible’ that energy companies reap windfall profits says IPPR
IPPR researchers have reacted to today’s emergency energy policy announcement.
On the energy price cap and the overall support package Dr George Dibb, head of the Centre for Economic Justice at IPPR, said:
“Freezing energy prices is necessary, but energy companies will still be making record profits and an expanded windfall tax is not only fair but essential to help pay for this policy. It is morally indefensible that these profits are underwritten by the state whilst households carry the burden and continue to struggle with high prices.
“It is good to see the prime minister ditching the free-market rhetoric of the campaign and getting to grips with the scale of the emergency we face. Capping energy prices will keep inflation down and support household incomes, potentially holding off a damaging recession. But the PM must avoid combining it with costly and regressive tax cuts. This will waste the inflation-busting potential of price caps and will likely prompt the Bank of England to raise interest rates further still.”
On the need to pivot to cheaper, cleaner and more secure energy sources Joshua Emden, IPPR senior research fellow, said:
“Reintroducing fracking and expanding oil and gas drilling is a waste of time and money and out of step with the public. It will not only undermine our net-zero target, but there is much less economically viable gas than its proponents claim. Recoverable shale reserves are substantially overstated, most remaining North Sea reserves are oil, not gas, and it takes an average of 28 years to develop new fields, by which time we could have already completed our entire net zero transition. In short, this is not a viable strategy to address the current energy crisis or future energy supply. The so-called ‘treasure under our feet’ is actually fool’s gold.”
“Freezing the price cap while cutting green levies is incredibly short-sighted and counterproductive. The kinds of technologies these levies support like insulation for low-income housing and renewable generation are absolutely essential to cutting bills and getting the UK off gas. These technologies have never been the problem, they are solution.”
On the need for more targeted support for low-income families Rachel Statham, IPPR associate director for work and the welfare state, said:
“Freezing the price cap at £2,500 will help scores of people across the country, but we must not forget that typical bills have already nearly doubled from October last year, when they were set by the price cap at £1,277. Millions of people were struggling to pay their bills then and there are now many more for whom energy costs are simply unaffordable.
“It is vital that the UK government now announce more targeted support for households on low incomes, disabled people and families with children, who are likely to face higher energy costs. We urge the government to deliver this support through the benefits system to ensure it is targeted, reliable, and sufficient to keep families afloat this winter.”