Cost-of-living crisis: UK braces for blackouts as leadership candidates clash over support measures

The UK is braced for electricity blackouts for several days over the winter when cold weather may combine with gas shortages.

Under the government’s latest “reasonable worst-case scenario,” Britain could face an electricity capacity shortfall totaling about a sixth of peak demand, according to people familiar with the government’s planning.

The report came as the two Tory leadership candidates clashed over support levels for the cost-of-living crisis.

Under the scenario, the UK could face four days in January without energy and may need to trigger emergency measures to conserve gas.

Rishi Sunak during a hustings event in Darlington, County Durham, as part of the campaign to be leader of the Conservative Party and the next prime minister. Picture date: Tuesday August 9, 2022.

A BEIS spokesman said the scenario was “not something we expect to happen”, adding: “We are not dependent on Russian energy imports, unlike Europe, with access to our own North Sea gas reserves, steady imports from reliable partners, the second largest LNG [liquefied natural gas] port infrastructure in Europe, and a gas supply underpinned by robust legal contracts.

“Households, businesses and industry can be confident they will get the electricity and gas they need.”

Labour’s Shadow Secretary for Climate Change and Net Zero Ed Miliband claimed the issue was down due to a lack of investment from the UK Government.

He said: “Whilst the Tories squabble over tax cuts, Britain is now readying itself for catastrophic power cuts this winter.

"This is a complete disgrace to a British public already struggling at the hands of an absent government that has left our economy in tatters.

"What we are faced with is the result of 12 years of Tory government which has failed to prepare and refused to invest, leaving bills higher and our country less secure.

“Instead of mending the roof while the sun was shining, they cut back on the things that would be protecting families and businesses now: scrapping all home insulation programmes, blocking the cheapest, home-grown energy like onshore wind and solar, and shutting down our remaining gas storage.”

It came as the two candidates to replaced Boris Johnson argued over cost-of-living support during a leadership hustings in Darlington.

Mr Sunak suggested he could offer hundreds of pounds in extra support to those shouldering the rising cost-of-living burden after analysts delivered a shock warning that energy bills could top £4,200 in the new year.

The two remaining contenders in the Tory leadership race faced renewed calls to spell out how they would help after Cornwall Insight forecast average bills could hit about £3,582 in October, from £1,971 today, before rising further in January.

Mr Sunak has said he has “no doubt” extra support will be needed to get people through the winter, and he is “confident” he can find the money needed to ease the strain from Government efficiency savings.

The former Chancellor also agreed to meet with Ms Truss and the Prime Minister to talk about future cost of living support, but said at the end of the day his rivals ax-cutting plans are “not going to work”.

It follows Tony Danker, director general of the Confederation of British Industry (CBI), saying on Tuesday that the Prime Minister and the two contenders to replace him should “come together to agree a common pledge to support people and help quell fears”.

Asked if he would get in a room with Ms Truss and Mr Johnson and decide additional support prior to September 5, Mr Sunak said he was “happy to do that”, but said the answer to that question is at stake in the contest.

He explained: “If you only want to help these people with tax cuts – I’m struggling to see how it’s possible.

“So we can get in a room all you want, but at the end of the day that policy is not going to work. So if you can get Liz to change her mind on that when she talks to you I’m very happy to get in the room and we can hammer this out.”

Ms Truss, meanwhile, refused to commit to extra support for families struggling with the cost of living, again insisting her priority was driving through tax cuts to kick-start the economy.

The cabinet minister said: “There’s a fixed pie, we have to share out the pie and we have to give out the money and hand out.

"My view is that we can grow the pie, and having lower taxes actually helps us generate more income into the economy so there is more money to go around.

“What I fundamentally don’t agree with is putting up taxes and then also giving out benefits. I think that is the wrong approach.

“I understand people are struggling with their bills on fuel and food but the first thing we should do as Conservatives is help people have more of their own money.

“What I don’t support is taking money off people in tax and then giving it back to them in handouts. That to me is Gordon Brown economics.”

Ms Truss also hit back at a warning by Deputy Prime Minister Dominic Raab, who supports Mr Sunak, that her plan for emergency tax cuts was an “electoral suicide note” that could let in a Labour government.

She said: “I don’t agree with these portents of doom. I don’t agree with this declinist talk, I believe our country’s best days are ahead of us.”

It came as experts warned the Treasury would need to top up spending by more than £8 billion this year and more thereafter to compensate for the squeeze on public services dealt by sky-high inflation.

As public service budgets are set in cash terms – and therefore do not enjoy an automatic boost from higher prices, unlike tax revenues – the Government’s spending plans are now “considerably less generous” than originally intended last autumn, according to the Institute for Fiscal Studies (IFS).

The think tank estimates that the average, real-terms, growth rate in day-to-day public service funding for the next three years has dropped from 3.3 per cent under original plans to 1.9 per cent per year.

In other words, higher inflation is expected to “wipe out” a significant chunk – more than 40 per cent – of planned real-terms rises, it said.

To remedy this, the IFS estimates that the Treasury would need to top up spending plans by more than £8 billion this year, in 2022−23.