We British specialise in holding two contradictory positions at once, especially when it comes to politics. Avowed NHS-lovers will grumble incessantly about its lengthy waiting-lists. We dislike part-time politicians – but somehow loathe career politicians even more. The sagas of Pen Farthing and Geronimo the Alpaca strongly suggest that we’ve pioneered a way of being sentimental to the point of soppiness about animals, while showing a noticeable disregard for humans in a similar plight. No one does cognitive dissonance quite like us – an intellectually cost-free way of having our cake and eating it.
Yesterday provided another salient example in the form of the green agenda and the cost-of-living crisis – two utterly contradictory conversations which are happening at once, each without reference to the other. While Labour led a parliamentary debate about cutting VAT on fuel bills in the Commons, Shadow Chancellor Rachel Reeves berated the Government for failing to prioritise UK energy security and called on ministers to do more for struggling consumers. Many of her points were correct; and for the Government to face any kind of pressure to reduce taxes must surely be a good thing. Yet there was also a substantial elephant in the Commons.
The consumer benefits of reducing VAT by 5 per cent would be paltry compared to the potential gains of reducing the various green levies which make up a significant proportion of electricity bills, and depending on the level Ofgem sets the price cap when it is tweaked in April, energy firms might well absorb some of the future VAT cuts. Yet Labour daren’t target the cost of green levies, because this would undermine another key aspect of their agenda; out-flanking the Tories on the environment, so they opt for the lower-hanging fruit of VAT while congratulating themselves for being such valiant defenders of the poor.
It’s not just Labour either. Despite the surging costs facing consumers, the PM held firm on green levies when pushed on the subject last week, citing their importance in sustaining Britain’s renewables industry.
On the same day as Labour’s debate, Ovo Energy was forced to apologise for issuing customers of one of its subsidiaries with deliciously simplistic advice for keeping warm in their chilly homes, worthy of Pippa Middleton’s infamous book on throwing parties. Try “a cuddle with your pets and loved ones to help stay cosy”, they said, a “hula-hoop contest” or cheeky bowl of porridge rather than switching on those pesky radiators.
All this attracted rightful ridicule, but the hula-hoop contest arguably seems an unavoidable outcome of the rapid transformation in our energy use which every major party has signed up to. Hiking prices to discourage use is an explicit aim of many green policies; such as air passenger duty. For all but the most insulated homes, mandatory heat pumps will almost certainly mean cooler temperatures.
Expressions of outrage from Labour and Tory environmentalists about bills are a bad case of “too little too late” when they’ve ignored or opposed viable forms of energy for some time – in their opposition to fracking, and, in the case of the Government, its long-term ambivalence towards nuclear power. Labour has only very recently warmed towards the idea, following a string of 2019 losses in seats like Workington and Barrow-and-Furness with nuclear power stations (indeed, with the Hartlepool by-election, all “nuclear” seats are now represented by a Tory MP).
Certainly, our current energy crisis owes much to worldwide pressures – low renewable generation over the summer, the surging global demand for gas, a deliberate attempt by Russia to exert leverage (potentially to weaken Europe’s response if they invade Ukraine). But we are not just suffering at the whim of international markets. Consider what our Government has done with what is in its remit. We are now paying as much as 10 times more for natural gas than US consumers, partly due to our failure to tap into shale reserves. And still, even in the midst of a consumer crunch, the Government seems reluctant to sanction even a temporary rethink of green levies. When questioned about mounting energy costs, ministers will usually respond by referencing some government subsidy or scheme, never any of the underlying causes.
This reflects a depressing shift in Tory thinking; from supply-side to demand-side. But the entire national conversation operates in a similar vacuum, and such self-contradictory thinking is directly reflected in our policies. Instead of opting for simpler ways of targeting environmental footprints, such as a border-adjusted carbon levy – politicians invariably favour some complex round of taxes and exemptions, inflating bills via green levies; then subsidising the bills of those on low incomes.
As such, energy policy ends up operating a bit like the water cycle, a self-perpetuating round of tariffs, caps and subsidies. At the centre of these ever-decreasing circles of ever-increasing prices is, of course, the consumer. Perhaps cognitive dissonance does have a cost after all.
