Dr Jeevun Sandher

We have been trapped in a vicious economic circle for decades, and that vicious circle is underpinned by our dependence on fossil fuels, which means lower growth, higher inflation and a higher debt burden. More than that, lower growth and lower income mean more fear, more fury and more far-right agitation for our constituents, as we see on our screens and, increasingly and worryingly, on our streets. That is why we are setting out how we are breaking out of that trap and building a virtuous economic circle of higher growth, lower inflation and a lower debt burden. To set out how and why we are in this place is very simple. Fossil fuels are more expensive—50% more expensive even before the Iran crisis struck—than wind, solar and nuclear. What does that mean for us at home? It means less spending, which means less growth, and it means higher prices and higher inflation, both of which mean a higher debt burden. Because our debt is linked to inflation, it also means high interest payments. There is a fundamental perverse economic link between fossil fuel prices and our economic prosperity, and that is what we are now breaking. We are breaking out of that trap by ensuring that we get lower energy prices now and in the future. In the first instance, we are providing immediate relief on bills, lowering energy prices with affordability payments, and funding that by windfall taxes. That means not only more spending, but lower inflation, and lower inflation means the Bank has more space to cut rates. At this time, when the Bank is worried about second-order effects, it is not right to borrow money to ensure those bills come down; it is right to ensure we raise the money from tax to lower bills and lower interest rates. In the longer term, when we invest in clean energy, we know that means lower energy bills and higher growth in the future. We know that works because, although natural gas used to set our price over 90% of the time, it now sets our price only 60% of the time. We know that we can break out of this trap because we are already doing so. Finally, I will close by saying that this is about more than just affordability or bills; it is about the way we cohere and live together as one. We cannot expect people in this country to have a stake in it if we do not have a stake in them and do not show that we can make life affordable for them. Only then can we build a country, and by the strength of our common endeavour we achieve more than we do alone.