AT last the Cabinet have done something sensible by seeking to speed the exploitation of the UK’s oil and gas reserves. It seems Rishi Sunak has finally done the maths and has begun to grasp that Net Zero (hitherto never costed by the government) is unaffordable. It will lead to energy shortage (and price rises) which in turn will lead to economic disaster.
The stark reality is that the UK is woefully short of electricity generation and that so far there is no bulk energy storage (essential to make wind power effective and solar power useful). It’s coming, but not any time soon and the costs are horrifying. Despite this reality, self-appointed ‘ethical investors’ routinely threaten to de-fund the major oil and gas companies – the very organisations desperately needed to keep the lights on.
Some commentators far closer to Westminster than I am are interpreting this as the beginning of Sunak’s bid for power. I’m not so sure: frankly, who would want to be Prime Minister now? On top of the largely self-inflicted looming energy crisis and the demonstrated failure of the NHS, there are other problems.
The government machine is broken. ‘Partygate’ is the tip of the iceberg; government departments are out of control. For example, at a time when the Army is struggling to find a credible armoured force to boost Nato’s Eastern flank, it devoted yesterday to ‘reflecting on inclusivity’. This is, of course, the same Army which has taken 30 years and spent £5billion on a reconnaissance vehicle that doesn’t work and which despite being larger than the Cold War British Army of the Rhine can deploy only two armoured brigades (and that’s stretching the definition) whereas BAOR had nine, plus an artillery brigade and a whole host of other supporting units.
The really bad news is that the Ministry of Defence is far from the worst-run department in government. The Home Office has still achieved nothing beyond bills and soundbites in its duty of keeping our borders secure. The Education Department continues to run state schools in the (perceived) interest of educators rather than pupils. The Department for Transport still spends billions solving the problem that no one ever had of getting from London to Birmingham a little faster.
Most threatening, though, is the national debt. It continues to pile up and has now reached £2.6trillion, growing at over £5,000 per second. Worse, some 25 per cent of the nation’s debt is index-linked: when inflation rises (as is currently the case) the interest cost goes up, so unless the economy grows significantly, either taxes rise, spending is cut or the government borrows more. So far the latter has been the preferred solution, possible only because the Bank of England buys its own debt. As at September 2021 it owned a third of all government debt. While some economists, now relatively silent, call this ‘new monetary theory’ (aka the magic money tree) the reality is that it’s a Ponzi scheme and will end in tears.
There’s no easy way out of this. The combination of out-of-control spending, chaotic government, rising inflation and an energy crisis will deteriorate further as interest rates rise (the only surefire way to snuff out inflation). With that, as those of us around in the early 1980s will recall, comes recession as consumers spend more of their falling income on tax and mortgage payments, leading companies struggle and unemployment rises.
Whereas Margaret Thatcher had five years, a landslide majority, a clear vision and an impressive, experienced Cabinet, the next PM will have a squandered majority, two-and-a-half years maximum and a Cabinet of losers. Only a fool would want the job. Rishi Sunak is no fool; one fervently hopes he focuses on fixing our disintegrating economy and reforming the failed government machine.