As the calendar flipped over to 2022, we asked on our front page – could it really be a happy new year? In truth we should have seen the bad news, delivered yesterday in a double whammy by the energy regulator and the Bank of England, coming.
A combination of wholesale gas prices spiking, an ongoing supply chain logjam and the Bank’s failure to get on top of inflation last year (when there was still a small window to do so) was probably always leading to this moment. At least we’re not locked down; goodness knows what some in the City would have done last night if they couldn’t grab a post-work pint.
The question now is what does the government do about the economic headwinds that are battering Britain’s economic recovery into submission. Let’s be clear: the ludicrous rebate, discount and pay-back scheme announced yesterday is not the right response.
It fails whether you believe that the taxpayer should step in or not; if you’re a rampant interventionist, it doesn’t go far enough and it’s targeted in the wrong place.
If you believe the market is better left lightly regulated and that governments, like children, are best seen and not heard, then it appears an extremely technocratic response to a crisis created by a string of short-sighted decisions on energy policy, mostly involving not allowing anybody to create any.
What now, then?
First, then, it is absurd to hand people back money for their energy bill from the very pot to which the Treasury will ask us all to contribute with higher national insurance payments from April. The tax cut must be cancelled.
Second, rather than knocking out 350-page navel gazing documents on levelling up, the government should produce a plan to encourage both growth and investment. It can be as short as four words: lower taxes, investment encouraged. This stuff can be simple. Goodness knows why the Treasury is making it quite so complicated.