The government’s “don’t panic” message on energy is preventing sensible efficiency measures

The UK has so far not suffered any significant energy shortages as a result of the Middle East war and has been free of the panic buying that is affecting some countries in Asia and Australasia. Ministers are determined to prevent similar scenes in the UK by sending out “business as usual” messages. They are also pointing out that, as a result of the 2025 budget decision to switch some policy levies from electricity to general taxation for three years, that home heating bills will go down for most people from 1 April until the price cap is reset in July. This reassuring message risks looking complacent.  

A big supply shock can be mitigated by a demand response

The immediate impact that households (as opposed to businesses) are feeling is at the petrol pump. Drivers of electric vehicles (EVs) will be looking smug, but everyone else, particularly those with diesel cars, are facing significantly higher prices every time they fill up. Other governments are temporarily cutting fuel taxes, while the UK has held firm to date. The opposition parties are taking aim instead at the government’s plans to reverse Rishi Sunak’s 2022 “temporary” fuel duty cut, which will see fuel excise duty rise by 1p in September (then 2p in December).

But it makes economic sense to allow price signals to work. The price is rising because supply has been disrupted. Letting that increase work through the system should give people incentives to reduce their fuel consumption.  

There is useful advice the government could be giving on how to do that. Inflate tyres properly. Reduce unnecessary weight in the car. Restrict speeds. And think about walking, cycling or carpooling for journeys where that is a viable alternative. The government could also actively promote electric cars and give this lacklustre sector an injection of energy. Those are all ways in which households can cushion themselves against the rising cost of fuel. None of those are being mentioned by ministers who seem to think that such advice would risk inspiring panic. The head of the International Energy Agency has called for reductions in consumption, but that has largely fallen on deaf ears in the UK government.

This government seems as reluctant as its predecessor to send out messages about home energy efficiency

Boris Johnson’s Conservative libertarians were reluctant to tell people how they could reduce energy use when gas prices spiralled in the wake of Russia’s full-scale invasion of Ukraine. It was only when Grant Shapps took charge at the Department for Energy Security and Net Zero that there was any serious messaging, but the absence of coherent advice from government has not left the UK in a stronger position four years later.

Despite the ideological differences, this also seems to be a no-go area for the current government. Indeed, its (sensible) decision to reduce policy levies on electricity, means the government is hyping its “energy is cheaper” message for the next three months, which it will then have to reverse in July.  

Much more sensible would be to send the message now that, even though bills may be going down, energy prices will be rising and it is a good time to cut down on use to lower bills over the year and to think about measures that may make it easier to get through the autumn if the conflict is prolonged. The government has some initiatives here, with its promotion of plug-in solar and acceleration of Warm Homes Plan funding, but is offering nothing on demand management.  

Price signals matter when supply is short

As opposition parties line up to demand that the government abandon the September fuel duty rise, ministers should remember that that was always billed as a “temporary” cut. It did not move prices much on the forecourt. It cost a significant chunk of government revenue. And, even as pump prices fell to levels last seen well before the Ukraine war, it proved very difficult to unwind. So while the government is focussing on “price gouging” (and it is possible that there is some of that) rising prices are driven by supply shortfalls and are an important way of getting people to adjust. Government should help them with that. And if and when it unveils a support package, it should be one that helps people who cannot adjust to higher prices while maintaining the signal to those who can.

Watch Jill Rutter discuss ministerial messaging on energy prices on Channel 4 News