THE Conservatives’ brazen abandonment of their promise to give UK households some meaningful protection against soaring energy costs, which are in large part the result of the country’s embarrassing lack of security of supply, should not have been surprising given their abysmal track record.

Yet it was shocking nevertheless.

Newly appointed Chancellor Jeremy Hunt was part of that dreadful David Cameron-George Osborne austerity administration, which made many millions of ordinary households foot the bill for the global financial crisis from 2010 onwards with a brutal programme of cuts. This proved entirely counter-productive, as was surely inevitable, choking off growth, bearing down on tax revenues and hammering the public finances. Mr Hunt, it seems, has not learned the lessons, in spite of his perpetually smooth public relations drive, which appears to be particularly suited to breakfast television.

There is no doubt Mr Hunt had to do something to calm financial markets in the wake of predecessor Kwasi Kwarteng’s calamitous September 23 mini-Budget.

However, scrapping the previously promised two-year energy price guarantee from next April was the one thing he should absolutely not have done.

It is worth noting in this context that this protection had been laid out in detail earlier in September, well in advance of the mini-Budget, and estimates of the naturally high costs did not spook financial markets.

What frightened markets, and sent the pound plunging to a record low against the dollar, was the raft of huge new measures announced on September 23, including a reversal of a planned hike in the main rate of corporation tax from 19 per cent to 25% and the scrapping of the 45p top rate of income tax.

These measures have since been reversed, and rightly so. History has shown rock-bottom corporation tax rates do not, to put it mildly, constitute a cost-effective means of fostering expansion.

There is room for debate over the mini-Budget move to reverse national insurance rises implemented in April. This is a costly measure but might help stimulate growth.

However, there was clearly no need for the Conservative Government to go back on its energy price guarantee, through which it had promised to cap energy prices so that an average household would pay about £2,500 per year for electricity and gas for a period of two years.

This two-year guarantee provided some desperately needed certainty for millions of anxious households laid low by the surge in energy prices.

It is worth noting that the £2,500 a year figure is nearly double the £1,277 per annum energy price cap which applied from October last year for a dual fuel household with typical usage. And it is a record high.

Everyone, but particularly new Prime Minister Rishi Sunak and Mr Hunt, should reflect on that.

The Tories, it seems, do not get the simple arithmetic, which is that this near-doubling of energy bills this winter is already placing a monumental strain on millions of households, even with the general £400 discount the Government has put in place.

Yet this degree of strain is far preferable to having no energy price guarantee beyond next spring.

The projections are that the annualised cost of electricity and gas for an average UK household will – if the energy price guarantee is not reinstated or continued in some form after it comes up for review in the spring – surge far above £4,000 from next April.

It does not take an economic expert to work out the effect of this. The Tories’ track record indicates they are no economic experts, yet they cannot compute the dramatic effect of removing this colossal amount of after-tax household income on aggregate demand, and hence growth and tax revenues.

This is a jaw-dropping situation.

Yet perhaps we should not be surprised that Mr Hunt either could not see this effect, or did not care about it. Ignorance and lack of compassion seemed, after all, to be hallmarks of the Cameron-Osborne administration of which Mr Hunt was part.

By scrapping the two-year energy price guarantee, Mr Hunt has almost certainly ensured a deeper and more painful recession.

Then again, the administration of which he was part from 2010 did not seem to care about exacerbating greatly the UK’s economic woes with an incredibly ill-judged austerity programme.

The Tony Blair Institute for Global Change think-tank put it very well indeed last week, after Mr Hunt went back on the promise.

It said: “The Chancellor announced a Treasury-led review of the energy price guarantee (EPG). With such clear need for the Government to demonstrate a return to fiscal discipline, the estimated £58 billion cost of the EPG in 2023–24 was always likely to come under scrutiny. But imperfect as it is, the price freeze was introduced to protect against the twin risks of devastation caused by unaffordable bills for households and the crushing economic recession that would inevitably follow.

“These risks will not have gone away by next April. Bills of between £3,500 and £4,500 are estimated for next year.

“But they could be much higher: next winter is likely to be harder than this winter as Europe’s ability to refill its reserves depends on the unknowns of geopolitics, weather and demand.”

James Smith, developed markets economist at Dutch bank ING, declared last week: “The UK Government has announced it will make its energy price cap less generous from April next year. That could add 3pp (three percentage points) to inflation for much of 2023 and, depending on how the changes are made, could deepen the recession we’re forecasting this winter.”

Flagging a scenario in which most households reverted to the much higher price cap set by regulator Ofgem’s mechanism, he added: “That kind of hit to disposable incomes would inevitably deepen what would otherwise hopefully be a reasonably mild recession this winter. The Chancellor will be hoping that energy prices continue to fall, lessening the blow to households.”

Hope is a fine thing, but it is not something on which policymaking should be based.

Mr Smith noted that ING thinks “the Treasury may well need to offer extra support in one form or another before April next year”.

It would surely have been better if the Conservative Government had actually stuck with the one thing it had done almost passably – providing households with meaningful support and certainty for two years on energy bills. Instead, in an act of gross stupidity, it went back on its promise.

The previous two-year support was far from entirely adequate, given bills this winter for an average household will be about double those last winter at a time of rampant inflation and surging interest rates.

And that makes it all the more incredible that Mr Hunt decided to break even that promise.

The Tories are now set to reap what they have sown on this front, with increasingly fragile consumer confidence translating into greatly reduced aggregate demand and a deeper recession.

It is not clear, however, that they care about this.

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