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Energy Price Uncertainty Looms Over British Households

With Parliament back, both parties need to focus on what’s going to matter to voters in the next months: housing and energy prices will be top issues, together with questions on net zero, writes Elena Siniscalco

After what seemed like an endless summer recess, Parliament is back on this week, with a distinctive back-to-school feeling. Some MPs look a bit disoriented, like they need some help to remember what’s going to matter in the upcoming months.

People are dead worried about housing, whether they’re young renters, families with mortgages or households pushed into temporary accommodation by the skyrocketing cost of rent.

For young renters – an influential group of voters, which has historically leaned towards Labour and that the Tories always want to win over – things look pretty bleak. In London, the average rent went up to over £2,500 in April, according to Rightmove. People in the capital are spending on average 40 per cent of their household income on rent.

Even in other parts of the country where the rental market is less cruel, rental prices are pushed up by a lack of housing. Coastal towns and tourist hotspots are plagued by the Airbnb conundrum, with communities hollowing out because the youth move out to the cities as there is no housing – and no jobs – available for them

Mortgage holders are not in a much better position. The amount they have to pay has gone up over the last year, together with interest rates, with many forced to sell their home because they can’t afford to repay their mortgage. Others who are renting out have hiked their tenants’ rents to pass on the cost to them, creating a spiral of problems. This group of voters wants the government to do more to help them. In June, Chancellor Jeremy Hunt convinced lenders to provide a 12-month grace period before starting repossession proceedings. Yet the government has been clear that no direct support will be provided.

Labour and the Conservatives have been fighting to take control of the housing narrative, firing announcements and policy ideas at each other. The Tories have Michael Gove, the Levelling up Secretary, as their trump card. But Labour has been braver in showing resolve on controversial issues like building on the green belt. Whoever comes out of it looking more convincing will have a big advantage at the next elections.

What people are not spending on rent or mortgages, they’re spending on food and heating. Energy prices are another key issue as we move into autumn and winter. The energy price cap has been falling, but Ofgem CEO Jonathan Brearley said days ago that he couldn’t “offer any certainty that things will ease this winter”. Bills will go down, but they’re still higher than they were before the pandemic and Russia’s invasion of Ukraine, and won’t go back to pre-2020 levels until the end of this decade, according to Cornwall Insight.

Meanwhile, the government support schemes for households and businesses were terminated over summer. Keir Starmer has insisted on making oil and gas giants pay extra tax, and on insulating 19 million homes to lower bills, but has been vague on the how and when. One of the two parties will have to reign over this issue to look credible.

Another thing that matters is our strategy, as a country, when it comes to net zero and green energy. The Tory party under Sunak looks increasingly uninterested in, if not sceptical, about the road to net zero. This pisses off many more people than simply Just Stop Oil activists. Sixty-four per cent of adults in the UK say they are somewhat or very worried about the impact of climate change, and numbers are higher for younger demographics. Young people on both sides of the political spectrum see the benefits of transitioning to a green economy in terms of jobs and innovation. Yet the government is making insufficient progress towards net zero, according to the Climate Change Committee.

City investors are equally annoyed at the government’s repeated u-turns on green energy and infrastructure. They need Westminster to decide what the course and pace will be, to plan ahead. With Starmer’s City offensive getting a foothold, the government would be foolish not to take the Square Mile’s concerns seriously. In the upcoming months, it will have to determine what its decisive strategy on net zero is. And if it decides to effectively take a step backwards, it will have to deal with the political consequences of such a choice.

One last thing to care about? Transport. If the state of a nation is defined by its railways, we’re faring pretty poorly over here. Strikes might be largely past us, but everyone has given up on trains. There will also be the question of TfL funding for the next year as well as more noises about the Ulez scheme. Finding tangible solutions for some of these tensions, instead of simply playing politics with them, will give the last, key advantage to whatever party will prove up to the task.

By City AM