Gas shortage: who got us into this mess?

Obsessed with the free market, Thatcher created the problem – and Labour hasn’t helped

BY Neil Clark LAST UPDATED AT 06:36 ON Tue 12 Jan 2010

Britain is within seven days of running out of gas if the cold spell continues and fresh supplies don't arrive soon. Gordon Brown has assured us that supplies are not running out, but the National Grid yesterday issued an unprecedented fourth gas balancing alert. It also issued an appeal for more gas to be pumped into the UK after promised supplies from Europe failed to materialise.
 
The Conservative opposition have, unsurprisingly, been quick to make political capital out of the stoppage of gas supplies to nearly 100 businesses which occurred last week and which are likely to be necessary again this week. But they really are the last ones to talk. For it was the Conservative government, elected in 1979, which is largely to blame for our current energy problems.
 
Up to 1979, Britain, under both Labour and the Conservatives, had pursued a sensible, balanced energy policy - one which looked to the future and sought to make the country as self-sufficient as possible.

But in 1979, free market dogma took over from commonsense. From now on, Britain's energy policy was that we didn't have an energy policy. Instead of forward planning, 'market forces' would decide everything. The state-owned British National Oil Corporation was privatised. And the government opted for oil to be extracted as quickly as possible, in order to pay people not to work, instead of extracting more slowly and taking into account our 21st century needs.

In the words of Alex Kemp, professor of petroleum economics at Aberdeen University, "Oil revenues were used as part of macro-economic management rather than energy policy, looking 30 years ahead."

The gas market was "liberalised" - with British Gas being sold off in 1986.
 
And, perhaps most damagingly of all, Britain's coal industry was all but destroyed - not because it made economic sense (it didn't), but because of the government's desire to crush Arthur Scargill's National Union of Mineworkers.

In the early 1980s, coal generation provided around 80 per cent of the UK's electricity. But the so-called 'Dash for Gas' by the short-term profit-obsessed, newly-privatised power companies from the early 1990s onwards - encouraged by the Conservative government - led to Britain's North Sea gas supplies being used up far quicker than should have been the case.
 
Labour criticised the 'Dash for Gas' while in opposition, but just three years into office they changed tack and in 2000 lifted their moratorium on gas-fired power stations.
 
Thirty years on, the enormous folly of these dogmatic 'free market' policies is clear for all to see.
 
Having frittered away the huge financial bonanza of North Sea oil - which could and should have established our status as one of the wealthiest countries in the world - Britain is now a net oil importer and imports around half of its gas too. Our dependency on foreign suppliers will only increase as our own supplies dwindle further; it is predicted that we will be importing up to 80 per cent of our gas by 2015.
 
Sensible European countries who plan for the future have invested heavily in gas storage. The French have reserves equivalent to 24 per cent of national consumption. The Germans, 21 per cent. Free market, 'let tomorrow look after itself' Britain, has four per cent.

The lack of gas storage facilities means that Britain, more than any other leading European country, is vulnerable to problems of supply and unexpected price hikes.
 
Meanwhile, according to the World Coal Institute, at least 1bn tonnes of coal could lie under British soil, enough for around 60 years' consumption. Any comment on that, Lady Thatcher?
 
Back in the 1940s, the Labour politician Aneurin Bevan famously said that given Britain's natural abundance of coal and fish "only an organising genius could produce a shortage of coal and fish at the same time".
 
By the same measure, only a blind adherence to extremist free market dogma could have got Britain, given its abundant energy resources, into the mess we are in today. ·