What should the government do now?
With the conflict in the Middle East entering its second month and showing little sign of reaching a conclusion, the UK government needs to show that it has a plan to manage the consequences. That needs to work on three distinct time horizons: the immediate response; developing medium-term options; and ensuring the UK’s longer-term resilience. Coordination is necessary to ensure that those three states of responses reinforce rather than undermine each other – and they all need to take account of emerging intelligence on the developing situation internationally and domestically.
No.10 should establish clear coordinating machinery inside government
The prime minister has been commended for his stance on the UK’s limited military involvement in the conflict (albeit in some cases belatedly), but at home it is far from clear who is in charge of the government response, or how it is being coordinated. The government has called COBR meetings and ‘summits’ with affected businesses, but a crisis on this scale requires continuing coordination at the highest levels.
As prime minister, Gordon Brown established the National Economic Council as a prime coordinating forum for action on the 2008 financial crisis. What was particularly useful at the time was the underpinning and high-level NEC (O) committee of officials. The secretariat compromised officials from Treasury and the Cabinet Office. This government could apply a similar model now – bringing in the Treasury but also the business, transport and energy departments.
Local and devolved governments will also play a part: the recent heating oil package will be delivered by them, so it would make sense to have a forum that can be activated to engage these administrations in the design of any response too.
The prime minister and cabinet secretary should also stand up the necessary coordinating mechanisms within the centre, supported by a cross-government secretariat. They should also create cross-cutting teams to develop options for ministers, specifically designed for the immediate, near and longer term, as set out below.
Immediate response
The government needs to be ready to act, responsibly, where acute need rises immediately. It has already set out support for low-income households using oil for heating as kerosene prices have risen faster than other fuels and households using oil are not covered by the Ofgem price cap. The scale of the package may need to be revisited as the crisis develops; the government will need to monitor changing prices and assess whether further help is required or not.
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The government will also need to think about its approach to support for businesses. There is no price cap for non-domestic energy users, who are often on fixed contracts of 1–3 years, so businesses with energy deals ending soon could see a sudden rise in energy costs.
Energy-intensive industries will come under particular pressure. Industries like steelmaking and chemicals have been declining in the UK, though the government stepped in to save British Steel’s Scunthorpe site in early 2025 and has now agreed to invest £100m to reopen a CO2 plant closed in September.
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It may soon need to make wider decisions about what sites and sectors it will support through higher energy costs – and which it will not.
Similarly, the Department for Business and Trade needs to keep strategic supply chains under detailed scrutiny. The government should have a plan in place so decisions about which sectors and sites are critical to the national interest can be taken strategically.
The impacts will not be confined to intensive users, however – other precarious sectors like hospitality and retail may also seek help. Here too the government should be clear on where it is willing and able to step in, and where it is not, and what kind of support it should provide in what form.
That the UK is heading into summer will ease the immediate affects, but the government should think about what it says to people now about reducing their exposure later in the year. The Ofgem price cap falling at the start of April could make this a harder sell. But the government can start promoting energy efficiency and make the case that as bills smooth over the year, there will be benefits from using energy more prudently now.
One option – largely ignored in 2022 – is public campaigns about easy demand reduction measures that households can take immediately, like draught-proofing and ensuring optimal boiler settings.
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https://www.nesta.org.uk/report/free-and-low-cost-energy-saving-actions-to-bring-down-bills-improve-energy-security-and-help-the-planet/
These should also extend to private transport, where using fuel more efficiently and reducing unnecessary journeys can make a minor contribution to pressure on oil prices and shield people against the immediate price shock.
Demand reduction helps the government’s longer-term goals while cutting bills and reducing UK fossil fuel use – getting this information to households now will help on all these fronts. The public already appears to be reacting with increased interest in both electric vehicles
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and alternatives to conventional gas home heating. The energy company Octopus has reported a big rise in the number of people contacting them about getting solar panels since this crisis started.
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The government has also announced accelerated funding for the Warm Homes Plan, which assists with upgrades to lower-income households. This is too good an opportunity for the government to miss to reinforce the advantages of switching.
The situation is unpredictable and the government should also be planning now how it will manage the potential for shortages, whether for fuel or other critical products. DESNZ already has plans for how it would manage fuel shortages, including protecting supply for critical services and limiting individual purchases;
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DESNZ and BEIS, ‘Summary of response tools in the National Emergency Plan for Fuel’, updated 16 April 2024, https://www.gov.uk/government/publications/energy-emergency-plans-priority-fuel-allocation/summary-of-response-tools-in-the-national-emergency-plan-f…
the government should ensure that it has plans across all key sectors ready to activate if the need arises.
To do this, it needs to build early warning mechanisms with real time data, drawing on potentially unconventional sources as it did both in response to the financial crisis and in the pandemic to make sure that it can intervene before shortages emerge or supply chains break down to manage priority need.
Finally, if it is not doing so already, the government should also start developing worst case scenarios and planning how it would respond. That work should include the potential wider effects of a global economic slowdown or recession and the potential impact on public services of higher energy prices.
In 2022, the government effectively imposed a real terms squeeze on public services by not compensating for higher energy bills. It needs to understand the consequences if it does that again and how capable individual services are of managing that squeeze within existing budgets.
