Transcript:

Financially and environmentally, this is a no-brainer, for everyone except one person.

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It’s not your imagination: Britain really does have some of the highest energy prices in the world, and it’s a huge problem.

Hi, I’m Will Hodson. I ran a business that reduced people’s energy bills automatically. We actually went on Dragons’ Den — very cheesy, I know — but we managed to negotiate what was the best deal in the history of the show. We helped people switch to the cheapest provider. But nowadays, every provider is expensive, and that’s because our system is broken. We need to fix it, and it’s really not that complicated.

But the first question is: how did we get here?

Let’s start at the beginning – the beginning of the last industrial age.

Then, as now, manual processes gave way to machi

ne-powered automation, all enabled by cheap, abundant energy. Don’t forget that when Britain was an industrial superpower, we were an energy superpower too. In fact, by the middle of the 19th century, Britain produced two-thirds of the world’s coal. It was cheap, it was reliable, it was secure. Coal was all we needed.

The problem only became clear about 100 years later: we were too reliant on one fuel. In 1947, a shortage of coal forced the Attlee-led Government to shut down industry and impose blackouts. At the same time, coal-mining unions were becoming more powerful. This meant coal was less cheap and less reliable.

By the 1950s, another drawback was becoming clear. We didn’t know about climate change yet, but we knew coal was dirty — a pollutant — and the Great Smog of 1952 killed upwards of 10,000 Londoners. The Government acted, and in 1956, it passed the Clean Air Act. It was a sign of the times that London’s new power station, Bankside — which you and I know as Tate Modern — was quietly repurposed from burning coal to burning oil.

But our new reliance on Middle Eastern oil came at a price. A shortage of supplies in 1956, after the Suez Canal crisis, saw the Government impose rationing from Christmas of 1956 all the way to May of 1957. The country was in such a desperate state [that] the Prime Minister resigned.

Something more positive was happening in 1956, however: Britain opened the world’s first civil nuclear power plant. There were hopes that we were at the dawn of a new nuclear age, with limitless, almost free energy. By 1970, nuclear accounted for about 10% of our electricity generation. Fundamentally, however, we remained reliant on coal and overseas oil – and we were made to pay.

In 1973, the Yom Kippur War led to an explosion in the price of oil. This hit Britain hard: a three-day week, runaway inflation, and rolling blackouts. We needed coal, and the coal-mining unions knew it. With grievance and a golden opportunity to negotiate, they went to war with Ted Heath. Once again, due to an energy disaster, the Prime Minister of this country went down in flames.

But something was happening in the background that would change everything: we were discovering our own oil and gas reserves in the North Sea. By the time of the next oil crisis in 1979, with the Iranian Revolution, Britain was on the verge of becoming a net oil exporter. Oil revenue was what funded the entire political project of the 1980s, from tax cuts to welfare spending.

But we weren’t the only country that discovered North Sea oil. Norway did too, and they took a slightly different approach with their oil revenue. Norway used the tax receipts to create what is now the largest sovereign wealth fund in the world, worth over two trillion dollars. That fund supports essential Norwegian services, which means that every single Norwegian benefits from Norwegian oil – which is something for us to bear in mind.

By 1990, Britain was looking past oil for various reasons. We needed to fund different technologies – mostly nuclear, but also renewables. The question was: how?

And the answer is a historic aberration that we are still living with.

The Energy Secretary at the time, a man called John Wakeham, didn’t want an argument with the Chancellor, so he put a tax on everyone’s energy bill and he called it a levy. Economists hated it, saying the tax made us uncompetitive and would drive industry abroad. Voices in Labour said it was regressive, because it was a tax on an essential that everyone used alike. They were both right – but 36 years later, the hack lives on.

And it gets worse with age. Because levies now fundamentally contradict one of our great renewable objectives: electrification. Levies are heaped overwhelmingly on electricity rather than gas. So levies make it more expensive to switch to electric vehicles instead of petrol cars, or to electric heat pumps instead of gas boilers –when all of our other policies try to make it cheaper. Everyone knows it’s bonkers.

But there is one beneficiary which refuses to let levies go: the Energy Department. Levies have made them a Second Treasury, able to raise and spend billions of pounds with precious little scrutiny. All in all, levies have bloated our bills by hundreds of pounds – and cutting levies remains the only way to cut people’s bills overnight.

In fact, it happened in the mid-90s. We sold off nuclear power that we’d subsidised, so taxes came down and bills dropped by 8% immediately. But no government wanted to give up this easy access to raising taxes.

In 2002, the Government used the energy levy to fund the Renewables Obligation. And this is the start of the modern energy era. Climate change was looming large; we’d just ratified the Kyoto Protocol pledging action. And so we entered a brave new world, where we would contract with big business to build out renewable energy in Britain.

Now, something needs to be said at the outset here: renewable energy corporations are not charities. They negotiate with our government for as much money as they can possibly get. The big question has always been: how well would our government negotiate on our behalf?

As a basic principle of negotiation, if you can walk away from the table – if you have lots of other options – you’re in a good place to negotiate. But in negotiations with the renewables industry, we’ve had the opposite, because we’ve written into our law our commitment to get a certain amount of energy from renewable sources each year.

That’s why, in 2013, renewable companies extracted a strike price for offshore wind that was three times the prevailing wholesale price, because they knew we were desperate to get the industry going. And that’s why, in 2023, when the Government tried to drive a hard bargain, for once, the renewable industry just walked away. They knew we’d come crawling back to hit our targets, and when we did, we coughed up a 66% price increase.

So why would you tie your hands with targets? Because energy policy has become climate policy, and climate issues engender moral absolutes.

Now, I’ll put my hands up here. When I was 26, I had just seen An Inconvenient Truth, I had shadowed a former Green Party MEP in Brussels, so I fully supported the Climate Change Act. Given the urgency of climate change, I have to say, I didn’t have much time for people who opposed it either.

But my support wasn’t just born of youthful zeal – it also reflected the outlook of my country. Britain had enjoyed 20 years of economic growth over two and a half per cent.

I thought that would continue, and I was wrong.

Since 2008, our growth rate has collapsed to less than 1% a year. It’s also the case that our bills have risen steadily.

Britain today is a very different country, with very different challenges and a very different mindset. But we have the same Energy Secretary – and I’m not sure his mindset has changed at all.

Ed Miliband first became Energy Secretary in 2008, and as leader of the opposition, then Shadow Energy Secretary, for 20 years, his agenda has dominated UK politics. This is Ed Miliband’s energy policy. The rest of us just live in it.

What’s become clear is that Miliband’s moral mission has presented a huge payday for giant renewable companies who cannot believe their luck. There are signs that the UK energy system has been captured by the renewables industry.

For example, we have paid them to build out far more offshore wind than we can actually use. So when the wind blows, we often get to a point where our cables cannot handle any more load – and under the contracts that our government has entered into, we pay those wind turbines to turn off. That’s called curtailment. Last year, curtailment cost us £1.5 billion. And they’re still handing out contracts. By 2030, this same system could cost us £8 billion – £8 billion to throw energy away.

This isn’t about policy anymore. We’re talking here about scandal, and it needs investigation.

The thing is, I’ve always believed in renewable energy. I bought into the idea that it was cheap, because when the wind blows and the turbines turn, the marginal energy costs nothing. But I also bought into the idea that renewable energy was cheap because I really, really wanted to believe it was true. So I didn’t count the high costs of the advance contracts that made the marginal costs irrelevant. I didn’t count the costs of curtailment, or of connecting remote renewables to the national grid – all of which are paid by us, the billpayer.

When you add that all up, some estimates say that renewable energy costs us more than twice as much as the price agreed in contracts. The government is not revealing the full cost of renewables, because it will be embarrassing. This has to change.

But calculating the true cost of renewables is not designed as an exercise in humiliation. It serves a hugely important purpose for negotiations: if we can calculate the true cost of renewables, we can challenge renewable generators to bring their prices closer to alternative energy sources.

In the near term at least, there will need to be alternative energy sources, because the wind won’t always blow and the sun won’t always shine. Anyone who says different is telling you a fairy tale and treating you like a child. The UK needs baseload energy for those situations, which historically has come from coal, nuclear, or gas. Coal is too dirty; nuclear is not yet ready; so that leaves gas. And even Ed Miliband’s own Energy Department acknowledges that we need gas well into the next decade.

So let’s work out where we get that gas from. The first question is: do you want gas, or Liquefied Natural Gas?

Liquefied Natural Gas is the same product as gas, but highly processed so it can be transported around the world. The processing is highly carbon-intensive and expensive. It comes largely from the Middle East, and much of it was backed up in the Strait of Hormuz for weeks. Higher cost, higher carbon footprint, higher risk – Liquefied Natural Gas is not ideal. Not when you have gas in the North Sea.

So the second question is: do we want Norwegian gas, or British gas? Well, if we use our own gas, we can use our own pipelines, support our own industry, and generate tax revenue for our own country – and this can support people who are crying out for help. Remember, that’s exactly what Norway do.

Financially and environmentally, this is a no-brainer, for everyone except one person. And he just happens to be our Energy Secretary.

Ed Miliband will go to his grave insisting that he’s right. The question is whether he takes this country with him.

Energy policy is that important. When people get it wrong – like in the 1950s, like in the 1970s – heads should roll. But at crucial moments, this country has managed to get things right.

One hundred years ago, the Electricity Supply Act saw a country that was on its knees rise up and create the world’s first central electricity grid. Britain — apparently fading, apparently in decline — showed the world the way. At that time, Britons lived at the mercy of ragtag energy companies, electrifying only the streets that could pay. But with one almighty effort, against the darkness of the Great Depression, that all changed. People who hadn’t had work for years showed themselves to be heroes, planting 4,000 miles of cable across this land. And that one Act brought communities, from Cornwall to Caithness, into the light. We saw clearly what needed to be done, and we did it.

So, with all the problems that Britain faces in its energy system today, 100 years on, I still believe that we can turn things around, with a single Act of Parliament. Because we’ve done it before. We can do it again.

LFG will fix it

Today we’re launching LFG’s Emergency Energy Bill: a ready-made Bill that the Government could pass tomorrow. Here’s how it will bring your bills down.

First, scrap all levies from energy bills. Whatever your politics, they should never have been there in the first place.

Second, lift the ban on new licences in the North Sea. Whether we like it or not, we need gas – so let’s get it at the lowest cost, with the lowest carbon emissions, by using our own reserves. What’s more, we demand that the tax revenue from North Sea oil goes directly towards reducing our bills. The Government has this power to help every household in the land.

But that’s not all.

We’ll demand an investigation into the curtailment scandal that’s costing billpayers billions. By 2030, we’re on course to pay offshore wind giants £8 billion to turn off their turbines. Sometimes we pay the same company to curtail wind in Scotland, and then fire up gas to replace it in England. Something is seriously wrong.

We believe Ed Miliband’s system has been captured by the giant companies behind renewables. There should be no more offshore wind contracts until the government accounts for its full cost, including curtailment, and including the costs of connecting them to the grid. These are costs that energy companies should pay, because the British billpayer cannot afford to pay anymore.

In fact, we’ll challenge energy companies to bid to move up the queue to be connected to the grid. The revenue that generates will go direct to reducing your bills.

The Bill will also scrap the Clean Power 2030 targets. Those targets have pushed civil servants to procure wind at any cost, rather than focus on electrification.

Finally, we will simplify the statutory duties of the energy regulators, NESO and Ofgem. They’ll no longer have discretion to balance Net Zero, energy security, and efficiency. Instead, they’ll be focused simply on minimising costs in Britain, subject to security of supply.

We are not giving up on climate change. But we can’t solve it all on our own anyway. At best, Britain can be an example to other countries — and we are, at present, an example of how not to do it.

I’ll level with you: there’s no time to waste. So I’ll finish where I started. Britain has some of the highest energy prices in the world. Our Emergency Energy Bill will provide immediate relief for our industries, and for the millions of households who are struggling to afford the basics.

To support our Bill, go to lookingforgrowth.uk/saveus. Please share this video far and wide, because the British people deserve to hear the truth.

Thank you.

It should not take a movement, or a series of national and local campaigns, to force governments to tackle the cost of living, and to promote rising living standards. It shouldn’t but it does.

This is the movement for personal, social, economic, and national growth.

today’s launch

Today we’re launching Radical Honesty – LFG’s all new Substack about what has gone wrong, and what is needed to put it right.

We want your thoughts, and your ideas.

We will be running articles and essays written by founders, entrepreneurs, officials, campaigners, researchers, people that have just tried to build something – big or small. We want historical reflections, policy proposals, political and policy analysis, and personal accounts of people who have been helping to reverse decline. We want to examine what has gone wrong, highlight efforts to rebuild and renew, and explore serious ideas for how we can turn our nation around – and more. We want radical ideas – that means we will publish things we don’t necessarily agree with. We want to stoke a debate that will challenge the status quo.

In short, we will be publishing interesting work on areas concerned with personal, social, national, and economic growth.

If you want to contribute, please get in touch by emailing press@lookingforgrowth.uk