Rather than address the underlying reasons why energy is so expensive, the Government has gone for short-term fixes – such as the recent cut in VAT. Another round of support for more vulnerable households looks inevitable.
But remember that someone still has to pick up the bill. This is most likely to be other energy customers or taxpayers, and probably both.
Moreover, most of the remaining fixes would not prevent higher energy prices from feeding through into higher inflation. This is because the official statisticians usually treat discounts on bills as a “transfer payment”, which raises income rather than reduces either expenditure or prices.
The upshot is that any further policy intervention is unlikely to ease the Bank of England’s worries about second-round effects from higher energy commodity prices. Those concerns are prompting some on the Monetary Policy Committee to push for interest rate rises.
There are some glimmers of hope. Burnham has been quick to acknowledge that Britain will continue to need some oil and especially gas for many years, and that it makes sense to source more of that from the North Sea ourselves.
The decision to shunt Ed Miliband off to the Foreign Office was encouraging too, although this may come at the price of a big increase in the overseas aid budget.
But the legacy of the dumbest net-zero thinking runs deep. Miatta Fahnbulleh, the new Energy Secretary, has yet to make a decision on the future of the Jackdaw and Rosebank fields in the North Sea.
The arguments used by opponents to the project are feeble and contradictory. We are continually lectured that energy is bought and sold on global markets, so a small increase in UK supply will have not any impact on domestic prices.
Yet that same small increase in UK supply is supposedly enough to make a major contribution to global climate change. As bemused American observers often say, “go figure”.
In fact, it is not even true that there is a single global price for energy. But even if there were, sourcing more of it from the North Sea would be better for the UK’s balance of payments and public finances, as well as having a smaller carbon footprint than imports from further afield.
Similarly, we are often told that North Sea production of oil and gas is almost exhausted. But if that were true, there would be no downside from selling more licences to drill, if anyone still wanted to buy them.
A less ideological and more pragmatic approach would be to ensure that the prices of different energy sources reflected all the costs involved, including any environmental and social costs, and then let the markets decide how best to meet the UK’s energy needs.
Instead, successive governments have layered subsidy upon subsidy for renewables, while hitting fossil fuel companies with additional taxes that bear no relation to any sort of economic reality. No wonder so many of them are giving up on the UK.
At the same time, the Government continues to make it hard for any UK business, including energy companies, to access the property rights, land, labour and other resources needed to respond to demand.
David Turvey, an energy specialist, examines these underlying problems in greater detail in The Great Stagnation, a new book published by the Institute of Economic Affairs (IEA). (For the record, I am a fellow at the IEA and contributed the chapter on the impact of austerity and Brexit.)
In short, poor energy policy is one of the big reasons why the British economy has stopped growing. The UK has imposed a swathe of legislation that has increased the regulatory burden and made energy scarce and expensive.
In particular, the focus on intermittent renewables and punitive taxes on hydrocarbons has given the UK the dearest industrial electricity prices in the developed world.
Until the Government recognises this, the bad news will keep on coming.
Julian Jessop (@julianhjessop) is an independent economist. Roger Bootle is away
