Prime Minister Keir Starmer Appeals to Business Leaders Amid Looming Energy Shock
In a significant shift in tone, Prime Minister Keir Starmer has urgently appealed to executives from major oil and banking corporations to collaborate with the government in addressing a potential 1970s-style energy crisis. The Prime Minister convened crisis talks at Downing Street with leaders from multinationals including Shell, BP, Centrica, and HSBC, acknowledging that the economic fallout from the Iran war requires a united front.
Government Cannot Act Alone, Starmer Warns
Addressing the assembled business figures, Starmer highlighted public anxieties about rising energy bills, petrol costs, and food prices. 'The Government can't do it on its own. You can't do it on your own. We're going to have to work together on this,' he stated, marking a departure from recent accusations of 'profiteering' against energy firms by Labour figures like Rachel Reeves and Ed Miliband.
This appeal comes as the government prepares for another meeting of the emergency Cobra committee to develop contingency plans for potential shortages of diesel, jet fuel, and fertiliser, alongside measures to assist cash-strapped households.
Tax Windfall Amidst Economic Uncertainty
Despite the Prime Minister's stark warnings, reports indicate that the Treasury is poised to receive a substantial financial boost from the crisis. According to estimates, if fuel prices remain elevated for the next twelve months, the government could gain an extra £8 billion from VAT on petrol and taxes on gas and oil firms.
This includes approximately £3.5 billion annually from the energy profits levy on North Sea oil and an additional £2.4 billion from gas sales. Hundreds of millions more would be raised from excess profit levies on power generators, with the RAC suggesting an extra £2 billion from VAT on petrol sales.
Private Concerns Over Public Reassurance
While ministers publicly urge citizens to continue booking flights and driving as usual, privately there is growing alarm about the economic consequences. A Whitehall source revealed, 'It is still early days and there is a balance to be struck between freaking people out and preparing them for some tough decisions ahead, but the longer this goes on the more serious it is looking.'
The International Monetary Fund has warned that the conflict is reviving fears of a gas crisis similar to 2021-2022, with the UK particularly vulnerable due to its reliance on gas-fired power.
Expert Warnings and Political Divisions
Lars Jensen, former director of shipping giant Maersk, cautioned that the current crisis could surpass the oil shocks of the 1970s, noting today's greater dependency on goods like fertiliser and aluminium. Meanwhile, political divisions have emerged, with Tory leader Kemi Badenoch criticising Starmer's ban on new North Sea drilling as 'bonkers' and urging immediate action.
Chancellor Rachel Reeves has engaged with G7 counterparts, warning against protectionism as countries might hoard supplies, exacerbating the UK's situation. Sir Howard Davies, a former Bank of England deputy governor, highlighted that a surge in government borrowing costs could create a £12 billion hole in public finances, cautioning against large bailouts that might panic investors.
Diplomatic Challenges and Supply Concerns
Starmer emphasised a focus on de-escalation, particularly regarding the blocking of the Strait of Hormuz, which typically carries 20% of the world's oil. However, diplomatic efforts are hampered by the absence of talks with Iran or Israel and strained relations with the US, limiting the UK's leverage.
Energy analysts have proposed conservation measures such as lowering motorway speed limits and suspending domestic flights, but Downing Street has downplayed the need for immediate action, asserting that the UK remains well-supplied for now.
