The government has done nothing to prepare us for the coming financial storm

Like in a “phoney war”, there is still a sense of unreality, even complacency, about the coming energy crisis.

Perhaps because of the unseasonably hot weather, winter seems a long way away, and to worry about the cost of heating and lighting many months from now feels almost in poor taste. Without anyone saying as much, there’s a feeling shared by many that perhaps something will turn up.

Perhaps the war in Ukraine will come to an unexpected conclusion, and with it the sanctions on Russia and its gas. Perhaps the Saudis will respond to Western pleas and start pumping oil. Maybe China and India will do the right thing and ostracise Vladimir Putin, to bring the conflict to a softer end and ease the pressures on the global economy.

It’s fair to say that the government’s plans to give £1,200 in total to those most in need is welcome, and more generous than the Treasury initially wished. However, even that scale of assistance pales against the energy price rises to come, in October and again in January.

Depending on the exact scale of shortages – as well as events in Ukraine, energy resilience in Europe, and the weather – average annual domestic gas and electricity bills may spiral towards £4,000 a year or more. And of course that is just an average – many families in larger houses will find themselves in more serious difficulties. Food bills, fuel prices and mortgages are all expected to rise further, adding to the squeeze, while wages are stagnant, taxes remain high, and there’s a recession coming – meaning that some people will lose their incomes entirely and be thrown back onto an inadequate social security system.

Yet nothing is being done to plan and prepare for the coming financial storm. We have a “caretaker” government, led by a notoriously careless man, and the two people vying to replace him are airily discussing grammar schools and single-sex toilets. When they do talk about the cost of living crisis, it’s in terms of proposed income-tax cuts, which will do nothing for those who pay little or no tax, and will in all events be inadequate to the challenge. As the consumer champion Martin Lewis has said, Boris Johnson, Liz Truss and Rishi Sunak should be locked in a room until they can agree on how to support struggling families.

For a governing party that believes in individual responsibility and a small state, it is obviously difficult to respond to a situation like this. Its instinctive response might be to shrug, and to argue that the government isn’t there to pay people’s household bills for them – “Nothing to do with us.”

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This energy crisis isn’t a one-off. The price spike may subside, and energy prices won’t keep rising at 80 per cent a year, but gas bills will be stuck at their present high level for the foreseeable future, not least because the war in Ukraine and sanctions on Russia seem set to continue indefinitely.

Reducing the green levy – which would be highly counterproductive – or cutting VAT on bills will not make much difference. Neither will the patchwork of schemes currently in play. Nationalisation and windfall taxes won’t alter the forces pushing energy prices higher, though they might well help the government to control the situation and pay for the subsidies.

Anathema as it might be to today’s Conservative Party, it is becoming clear that the supply of energy to homes is as basic a necessity of life as are clean water and sewage systems, or free healthcare and education, and should be maintained as a basic duty of the state.

The discussion about retail energy thus moves from how it works as a viable business, towards its being an essential commodity supplied by the state – whether through state-owned or private companies – and how this can be accomplished at low cost, and through renewable energy, in future. That thinking needs to start now.