The energy price cap has proven “an abject failure”
25 August 2022
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Economics
In the Media
IEA research referenced in City AM
30 August 2022
Education
Commenting ahead of tomorrow’s energy price cap announcement, Andy Mayer, Energy Analyst at free market think tank the Institute of Economic Affairs, said:
“The sharp rise in the energy price cap will hit families hard and there is worse to come.
“The cap has proven an abject failure. It gives a false impression that prices can be centrally dictated, imposes costs from bankrupt suppliers, and locks in higher prices for longer. It should be scrapped.
“Tax cuts and removing VAT from electricity bills could provide some relief while temporary and targeted welfare increases would support the most vulnerable families. Freezing prices, however, would represent a large handout to wealthier households and impose gigantic costs on taxpayers, while risking shortages.
“The central focus must be on boosting supply. There is a need to strike trade deals, end the ban on fracking, abandon the windfall tax, reduce planning restrictions on all forms of energy, invest in grid technology, and reform the broken electricity market.
“The Net Zero ideology has undermined security and consistency of supply while pushing up costs for consumers. A more pragmatic approach, that rejects central planning and instead uses competitive carbon prices, markets and innovation would be a more effective way to deliver secure, affordable decarbonisation.”
ENDS
Notes to editorsContact: media@iea.org.uk / 07763 365520IEA spokespeople are available for interview and further comment.
See attachment for free market thinking on energy policy.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“The sharp rise in the energy price cap will hit families hard and there is worse to come.
“The cap has proven an abject failure. It gives a false impression that prices can be centrally dictated, imposes costs from bankrupt suppliers, and locks in higher prices for longer. It should be scrapped.
“Tax cuts and removing VAT from electricity bills could provide some relief while temporary and targeted welfare increases would support the most vulnerable families. Freezing prices, however, would represent a large handout to wealthier households and impose gigantic costs on taxpayers, while risking shortages.
“The central focus must be on boosting supply. There is a need to strike trade deals, end the ban on fracking, abandon the windfall tax, reduce planning restrictions on all forms of energy, invest in grid technology, and reform the broken electricity market.
“The Net Zero ideology has undermined security and consistency of supply while pushing up costs for consumers. A more pragmatic approach, that rejects central planning and instead uses competitive carbon prices, markets and innovation would be a more effective way to deliver secure, affordable decarbonisation.”
ENDS
Notes to editorsContact: media@iea.org.uk / 07763 365520IEA spokespeople are available for interview and further comment.
See attachment for free market thinking on energy policy.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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