Let them burn oil – Sunak and energy bills

Rishi Sunak’s latest U-turn in response to the cost of living crisis shows the Tories scrambling for a response. Gus Woody analyses the fossil politics behind the Conservatives’ strategy.

‘We should be pragmatic.’ So claimed Rishi Sunak, as he oversaw the largest hit to living standards in modern British history. Pragmatism, of course, is a common term in the new language of the Conservatives. It means a screeching U-turn, usually accepting something that MPs have been whipped to oppose only weeks, days, and sometimes hours before. 

In response to rapidly rising fuel prices, OFGEM raised the price cap on energy bills in April by £693, with a further £800 rise expected in October. This leaves the energy price cap at an eye watering £2,800. With rising costs for most basic commodities and landlords raising rents ever higher, this will leave millions in Britain stuck choosing between rent, heating and eating. Capitalism, always crisis ridden, is yet again grinding workers to the bone whilst bosses, landlords, and financiers benefit. 

While people are scrambling to comprehend how they will afford the next year, oil and gas companies have been announcing staggering profits. In the first three months of 2022, BP and Shell made a combined profit of £12.2bn, a near tripling of their profit in the same period of 2021. Such profits have led many to call for a windfall tax, to use this money to deal with the cost of living crisis. 

Sunakenomics

For most of May, the Conservative front bench and Sunak have aggressively resisted calls for such a tax. MPs, whether from the dispatch box or in the media, were told to go out and denounce any financial punishment of their friends the mega-polluters. Yet the tide began to turn over the last week.

Initially, the government was planning on giving a £200 reduction in bills to households, which would then have to be repaid over five years – a loan. In the face of rising bills, the Conservative solution was further indebtedness for the working class – minuscule loans in the face of a price rise of almost £1,500.

After the backlash against this, Sunak stood at the dispatch box on 26 May to announce a further change. There would be a windfall tax, of 25% of fossil profits, to fund a general £400 grant given to all households, with further allowances made for pensioners, disabled people and eight million poorer households.

Let there be oil

Such a policy proposal is fundamentally mealy mouthed in the face of the crisis ongoing across Britain. Fossil fuel companies are being allowed to keep 75% of their profits still, built on the back of war, speculation, and exploitation. At the same time, OFGEM’s price rises are still several hundred pounds larger than the grants most households will receive. 

There is a climate kicker to this pathetic response. Just as Sunak’s disastrous ‘Eat Out to Help Out’ policies prolonged and intensified the covid pandemic, this fuel tax will prolong and intensify climate breakdown. At the same time as announcing the tax, Sunak announced a near doubling of ‘investment relief’ for oil and gas companies.

Thus for every £1 a polluter invests in British oil and gas production, they will soon receive around 90p in ‘tax relief’. This is a major signal to polluters that Britain is opening itself up – to further North Sea Oil, to new mining projects, and even to fracked gas.

The Labour and Conservative governments of the 21st century could have avoided this energy crisis – not by investing in domestic fossil fuel production, but by beginning the transition towards renewable energy. Despite the obvious need to prevent any further oil and gas extraction to limit global warming, Sunak’s policies lock Britain and the world into a carbon bubble. In sum, the cost of these grants has not been put on fossil fuel companies, it has been put on the global working class of today and tomorrow, as it faces escalating climate breakdown.

Conservative petro-populism

The regular leaks from the Conservatives, particularly around the parties the PM and MPs held whilst thousands in Britain died alone and isolated, show a party at war with itself. Yet Sunak’s announcement and U-turn show in miniature an emerging Conservative consensus. Trying to balance a more economically interventionist with a fiscally conservative wing of the party, Sunak’s response highlights aspects of the strategic centre of his party’s politics. 

First, as we saw with spending during the pandemic, the modern Conservative party has shown itself to be able to quickly abandon previous red-lines of ‘fiscal responsibility’. In the face of a supine Labour party, jowl-faced in its desperation to appear reasonable to the middle classes, the Conservatives can then use these economic U-turns to regularly outflank their opposition.

By announcing a somewhat more ambitious proposal with the windfall tax than Labour were initially asking for, Sunak has left the opposition adrift. Rachel Reeves, the leading non-entity of the shadow cabinet, was forced to criticise Sunak on procedural grounds, not on the substance of the proposal. Reeves was found bleating to the Commons about the proposals coming too late, and that the government had been ‘dragged kicking and screaming’ into this U-turn. 

Consequently, the opposition are left unable to tackle one of the primary functions of this policy, which is to individualise the cost of living response. Sunak and the Conservatives can appear as heroes, with many households directly associating them with the reduction in their energy bills and the grant. At the same time, grant-based responses keep money flowing into the commodity economy, rather than providing services or meeting needs directly, merely enabling people to continue acting as consumers. Where grant finance isn’t enough, the Conservatives can return to their old tricks, as they have done repeatedly around food prices, and blame the working class for not being financially savvy. Where suffering is found, workers can be demonised for supposedly spending their grant money incorrectly, rather than the Conservatives for putting up a measly solution.

Sunak’s policies constitute a certain form of ‘petro-populism’. Petro, in the sense that Sunak is hoping to use this to redevelop British fossil capital. Populism, in the sense of attempting to link the direct alleviation of daily issues for the ‘people’ with the Conservative party. At the same time, the Conservatives reinforce their own understanding of ‘the people’ – those who are wealthy have earned their wealth, whilst those facing the bread line are there due to their own individual failures. 

Common sense for uncommon times

Bold ecosocialist proposals in the face of the ongoing crisis would take the form of an expropriation of not just polluter profits, but a nationalisation of energy infrastructure to effect a rapid transition away from fossil fuels and a capping of bills. Job creation through retrofitting, national food systems, and the like could begin to tackle these issues not just today, but in the long-run.

The 25% windfall tax was not the only bad news that mega-polluters had this week. On Tuesday, Shell attempted to hold their first in-person AGM in Britain. XR Money Rebellion and other activists succeeded in turning this into a farce, with protests limiting access to the building and 70 activists disrupting inside the AGM itself. The next day, Total Energies saw their AGM blockaded by over 100 activists in Paris.

At the same time, workers in the North Sea have begun an expanding wildcat strike in response to worsening work conditions and insufficient pay. Despite this, Unite have refused to support these workers, encouraging them to return to work so that talks can take place. Rising worker militancy in the fossil sector, combined with increasingly confrontational environmentalists, could provide a space for a new bloc against Sunak’s petro-populism.

Here lies one final element in today’s Conservative strategy. As Stuart Hall most convincingly noted, every conception of ‘the people’ in populism requires an enemy for ‘the people’ to be identified against. Today, this increasingly takes the form of environmentalists within Britain.

Organisers from Just Stop Oil, Insulate Britain, and XR are presented by the Conservatives as partly to blame for rising energy prices. As the Conservative argument goes, unless we build domestic fossil fuel extraction, ‘the people’ are weak, stuck on foreign fossil fuel imports. Anyone opposing fossil fuels is an enemy of the people, and must be met with new repressive police powers.

Labour, reclaiming its long tradition of supporting state violence, is more than happy to support this. Yvette Cooper, in a recent Parliamentary debate, criticised the Conservatives’ Public Order Bill for not including special measures to prevent the ‘disruption’ of groups like Just Stop Oil. Such shameless displays show a consensus amongst MPs to crush the environmental movement at a time where its necessity only grows.

Rather than falling into this trap, a new bloc must be built for this historic crisis, to resist Conservative petro-populism and its police powers. By linking together worker and environmental struggles, along with an ecosocialist program to tackle the cost of living crisis, a resistance can be built. If Sunak’s energy grants show an emerging Conservative strategy, so must the left build its own to resist fossil capitalism.