As energy bills soar, groceries get pricier and health services fall over, it’s heartening to see the Tory leadership contest tackle the big issues. Thanks to the brilliantly penetrating questions asked by debate hosts, we’ve learned that Rishi Sunak likes Prada and Liz Truss shops at Claire’s Accessories. We have learned that Ms Truss enjoys Shirley Bassey and that Mr Sunak might like to run Southampton Football Club. We now know that Liz Truss loves Welsh lamb, but that Rishi Sunak prefers Yorkshire lamb (can he really tell the difference? Oughtn’t he to undergo a blind taste test to restore trust in politicians? Can I have a show of hands from this dour studio audience?).
Here is what we haven’t learned. We don’t know how either of them plans to keep homes warm and factories running this winter. We haven’t learned what action they would take to ensure the country has access to enough gas imports if Europe cannot supply us. We haven’t learned whether they think we can get significant new supply out of the North Sea or British shale in time for winter, or whether they would temporarily reopen coal plants to see us through. We haven’t heard how they will deal with the acute pressure to give households more help with energy bills.
To be fair to him, one hustings host, Sebastian Payne, did ask Ms Truss how she would respond to the “Don’t Pay UK” campaign to stop paying energy bills in October. She did not give him an answer, but at least he asked.
At the hustings in Wales, Ms Truss mentioned that she “used to work in the shipping industry, liquid natural gas (LNG) shipping”. I, for one, would rather hear a bit more about her thoughts on LNG shipping and a bit less about her music tastes. I am sure I am not alone.
The gas situation is getting desperate
On the topic of LNG, some readers responded to my column last week by protesting that now is not the time to sign long-term supply contracts for gas, since the price will inevitably come down. I am afraid they misunderstand how grave our situation is.
Usually, in the winter, the UK meets peak demand by importing gas and electricity from Europe and has done so increasingly despite warnings about shrinking supply margins in Europe. That slice of supply is now unlikely to be available on all the days when we need it. We have, meanwhile, run down our own storage capacity and have little margin for error. Data collated by Lambert Energy Advisory, a specialist investment bank, shows that, without EU flows last winter, the UK’s other sources of gas would not have delivered enough to meet demand. And last winter was a mild one.
What’s more, gas producers have under-invested in new capacity because of government and regulatory warnings about so-called “stranded assets” – investments that lose value due to the phase-out of fossil fuels. Even now, despite the pro-gas rhetoric, producers are not confident it will last beyond the current crisis. It was only in December that Shell pulled out of developing the North Sea’s Cambo Field after it became a target of Cop26 protesters.
Offering long-term contracts to buy gas is the only way we have to show we are serious. If we want to increase supply to the UK, we need to be a reliable buyer. That doesn’t mean offering to pay today’s prices for 10 years. But if the UK won’t offer an agreed pricing mechanism and a contract to enforce it, we cannot be sure we will have enough gas to power the country this winter. It’s as simple as that.
A dose of honesty
Anyone wondering how Ms Truss has managed to get so far ahead of Mr Sunak should consider the following. Mr Sunak repeatedly and ridiculously tells Tory members that he would “give you my everything, my heart and my soul, everything I’ve got” in their service (except, presumably, his wife’s tax status).
Ms Truss, by contrast, when asked what she might do if she weren’t a politician, said that whatever it was, “It would probably be less stress and more money.”
I know which of them I believe.