Energy bills are due to skyrocket in October when the UK’s energy price cap is increased to at least £3,244, leaving a KW of energy costing British consumers, at, or above 40p (please spare a though for the UK’s small businesses too). I remember just two years ago paying 10p per KWh when I was with Symbio, one of the, almost thirty energy providers that went bust, just last year. Only last week, fearful of the coming price hikes, my son and daughter in law scoured the market for any “deals” on energy prices. The lowest price they could find was £550 on “offer” from British Gas, for a two year fixed plan. They decided to stay on the variable rate and will be paying around £330 from October.
So, the energy market in UK, and to be honest, Europe, America and large parts of the world are in chaos. It was only a few months ago that Vladimir Putin was offering gas at around 40p per Therm via Nordstream 2, but today, that seems like ancient history. Sunak’s first intervention was to pay £200 per UK Household to the energy companies, that money to be paid back through energy bills over the next five years. When we look at that “assistance” today, just a few short months later, it seems naive to say the least. Even £400 per household with no payback, in truth a bailout of the energy companies costing the taxpayer £10 billion, is now inadequate, as it was designed to offset an energy price cap rise of £2,800, not the £3,244 we are now expecting.
The average wage in this country is around £31,000 and fuel poverty is defined as paying 10% or more of your income on energy, so it isn’t hard to see that we are looking at one of the biggest cost of living shocks in years. The poorest in the country will simply not be able to pay, hence the bailout of the energy companies by Mr Sunak, which future generations will have to pay down. But this barely helps the situation many are facing now. So, what is to be done, because something must be done, and quickly. The Candidates in the race to be the next Prime Minister are offing to remove VAT on energy bills (Sunak), or, remove Green Levies on energy bills (Truss). Yet these “solutions” merely show us that each candidate is wildly out of touch with what is actually going on. VAT on energy bills is 5%, so that’s a “saving” of £13.50 per month. Green Levies are fixed and have fallen as a percentage of the energy bill as prices have risen, so, from October, the Green Levy will account for around 8%, or £21.60 per month. Maybe removing VAT and the Green Levy will help, but only a little, and neither proposal addresses how the poorest can be helped.
The shocking proposal to nationalise the energy market is now coming to the fore. Millions, if not billions of pounds is “divi’d” up to shareholders, which in normal times would be acceptable, but not anymore. France has recently made moves to nationalise more energy companies and it is only right that the UK Government looks at measures to do the same. Keir Starmer, Leader of the Labour Party, just a few days ago, declared that Labour is no longer interested in nationalising energy, or water, or railways and he may find himself on the wrong side of the argument in coming weeks. One point of interest in his decision though, was the costings for nationalisation of those industries rejected by Starmer. The total estimate being just short of £200 billion, which, considering our £450 billion bill for the pandemic, seems to me, to be a bargain, or maybe someone forgot to put batteries in their calculator again and the costs would be far higher as many say.
So, drastic action was required six, or even twelve months ago, but, that’s water under the bridge now. Maybe Liz Truss, if she gets to be PM could legislate for the price of energy to be cheap again, she seems to think that’s the way to deal with strike action, so why not? Maybe Sunak, if elected, will load the next generation with a few more hundred £billion to get us out of this fine mess. Whatever happens, it needs to happen now, because, come October, the UK is going to resemble, not a third country, but a third world country.