It’s the energy cap, stupid

It’s the energy cap, stupid

My prediction for the popularity of Liz Truss and her government is closely tied to the where the price cap ends up this winter. If Truss sticks to her rhetoric of no handouts then there’s no floor to the government’s unpopularity.

With Vladimir Putin set to punish the West for standing up against his war of aggression against Ukraine by messing about with Europe’s energy supply I’d expect the price cap to go well north of £5,000 and willing to back the 3.9 on this market from Smarkets, particularly if this market sees more liquidity then last night Sir Keir Starmer announced a policy that I expect the government will eventually co-opt.

The Labour leader, Keir Starmer, is to call for a ban on crippling energy price rises this autumn in a move that would save the average household more than £2,000 a year on gas and electricity bills, the Observer can reveal.

The demand to freeze the energy price cap at the current £1,971 level – blocking the regulator Ofgem from allowing a huge anticipated rise to around £3,600 in October – will place intense pressure on the Tory leadership candidates Liz Truss and Rishi Sunak to follow suit when one becomes prime minister.

Starmer’s plan, to be announced on Monday, comes as 70 of the country’s biggest charities and organisations across health, mental health, education, care and other sectors, today warn Truss and Sunak in a joint letter of dire consequences throughout British society unless they take more drastic action to address the energy and wider cost of living crises.

So I think backing under £4,000 might be the best option now.

Thérèse Coffey, close friend of Liz Truss and potentially next Chancellor of the Exchequer, earlier on this week has publicly pooh-poohed talk of the price cap exceeding £5,000, which might be quite the hostage to fortune.

But energy prices are going to dominate the rest of this parliament, if not longer, I think this will not be the last piece PB publishes on energy prices.


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