It’s a bank holiday, festival season and the weather’s looking fine. I was feeling pretty good. Then reality hit home.
It was well trailed, but perhaps like many of you I’d been avoiding thinking about the new energy price cap and what it will mean.
Ofgem’s announcement confirms that in October prices will have trebled in just a year, with the cap on average use soaring to £3,549. There’s worse to come. Analysts forecast it could go up by a further one to three thousand pounds.
This is a crisis that will have far-reaching, devastating repercussions. Millions face finding themselves in fuel poverty, unable to afford to heat their homes and having to decide whether to be warm or eat. Many will be unable to afford either.
People will die earlier than they should. Cold, damp homes and poorer nutrition will affect peoples’ health, particularly the elderly and disadvantaged.
The economic consequences will also be stark. Without further support, many struggling and debt-laden businesses – big and small – that barely survived Covid are likely to fold.
Consumer confidence, spending and investment will probably drop further and faster. With inflation anticipated to hit 18%, interest rates will continue to rise and mortgages may become unaffordable.
Industrial action can be expected to spread and intensify. All in all, a lasting recession is on the cards. The only good news is that employment rates are still strong.
Make no doubt about it, this is as big a political test for the next Prime Minister as the Covid pandemic was for Boris Johnson.
The £15bn support package announced before the summer is clearly inadequate given the new cap. So far Liz Truss – still the favourite to win the leadership race by far – has avoided saying what she would do, other than reversing the national insurance rise and temporarily halting green levies on bills.
Those plans won’t touch the sides. The NI reversal will benefit the wealthiest most and does nothing for people who don’t pay tax – mostly pensioners and people on benefits. The green levy will only cut around £150 a year off a household’s bill.
Energy companies have said a £100bn support package is needed. Only recently has the Truss camp conceded that more will need to be done.
When reality bites and Conservative MPs are faced by their constituents, they will scream for more, for fear of electoral oblivion.
It’s not just the poorest who will feel the coming pain. ‘White van man’, ‘hard working families’, the ‘just about managing’ – whatever voter types you can think of, people across the board who the Conservatives rely on to stay in power will be hit hard and will be looking to the Government for help and solutions.
Putin is determined that the West pays a high price for its support of Ukraine and isolation of Russia. Defending freedom and democracy must be worth the expense, but we again face a bleak winter and tough times for months and probably years to come.
We should make the most of the remaining summer while we can.
Photograph: Adrian Dennis/AFP/Getty Images