It’s hard to see why anyone in Downing Street thinks an energy price cap is a good idea, says Sam Ashworth-Hayes in The Spectator: the government will essentially be paying £170bn to ensure “we get blackouts this winter”. Lacking the usual Russian supplies, Europe doesn’t have enough gas to go around. With everyone “bidding against one another” for what little there is, prices will only fall when demand falls. But a price freeze removes all incentives for households and businesses to reduce their energy bills – so we’ll crank up the heating, “safe in the knowledge that the Treasury is covering the tab”. Eventually demand will outstrip supply, and that’s when we’ll get blackouts.
It would be much better to let everyone pay the full cost of their energy use, while doling out “massive quantities of cash” to those who genuinely can’t afford to stay warm. This would incentivise everyone to use less energy – a reduction in demand that would push prices back down – while also making sure people don’t freeze to death. That our supposedly free market prime minister is pursuing “socialist price caps” instead really does beggar belief. And once implemented, they’ll be “incredibly hard” to ditch. “Can you really see politicians deciding to triple prices next year?”