Energy price rises – are they really here?

So at last we have the announcement that the cap on energy prices will rise on 1st October from £1971 to an unprecedented £3539 pa. That is a massive rise of £130 a month. Or put another way, during the last quarter of this year the cost of electricity will nearly double (from 28p per kWh to 52p) and gas will more than double in price (from 7p to 15p per kWh).

This is completely unsustainable for people on low incomes and comes on top of the huge rise in other costs. For example, food costs for an average family have risen by £454 per year (£38 per month). The impact will not be spread evenly across society – people on lower incomes spend a much higher proportion on necessities, such as food and energy, than those on higher incomes.

According to the Joseph Rowntree Foundation 22% of the UK population are in poverty – that’s 14.5 million. Of course, the actual number depends on which poverty index is used, in this case they use relative poverty, where households have less that 60% of the current median income after housing costs.

The costs of living crisis has been a hot topic over the summer recess, and we should not underestimate the stress it will have caused to so many people. The planned cashback will help but will not meet all the expected rises. So we will be hearing many more stories of people asking food banks for foodstuffs that do not need heating. The Trussell Trust has launched an emergency fund to help people with both food and fuel costs.

So far there is no response from the Government although the Prime Minister will be speaking later today.

Liz Truss is simply concentrating on tax cuts. She is also committed to suspending green energy tariffs and increasing North Sea oil and gas production – it seems she can only think about one emergency at a time, so the threat to our climate is neatly shelved for the time being.

* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames, where she is still very active with the local party, and is the Hon President of Kingston Lib Dems.

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9 Comments

  • John Barrett 26th Aug '22 - 11:57am

    It can only be a matter of time before an increasing number of people simply cannot or will not pay their bills for gas and electricity.

    What will the response of all political parties then be?

    At a time when top executives’ pay and bonuses, and energy company profits, are rising nearly as fast as fuel bills, we need to see an immediate change in the way energy is supplied in the UK and how it is paid for.

  • Chris Platts 26th Aug '22 - 1:07pm

    We need to focus on the importance of increasing renewable energy

  • Barry Lofty 26th Aug '22 - 2:34pm

    My personal feelings on the immediate energy crisis is that we will have to make use
    of all the sources of energy that are available to us to ensure that people do not die of hunger and cold this winter, and yes, in the short term it may mean delaying some green initiatives but needs must, this government oversaw the unnecessary deaths of so many people during the Covid pandemic it must not be allowed to happen again!
    It would also counteract Putin’s use of energy in his war with Ukraine!

  • Peter Davies 26th Aug '22 - 7:56pm

    We have to remember that rising energy prices are not only felt through domestic energy bills but through the prices of every kind of goods or services requiring energy to produce. To shield the poor from the effect, we need to increase their incomes not reduce their fuel bills.

  • Peter Davies is right, things are going to get a lot worse over the coming year:
    Whilst energy bills are currently the biggest contributor to rising costs and are likely to go higher still as the UK competes in the world energy auctions, we should not loose sight of:
    Fuel prices – currently stable but I suspect they will exceed £2 a litre in the coming months.
    Food prices – these will increase due to shortages and increasing energy and transportation costs. Given prices were generally expected to go up by ~30% this autumn and that was before the current energy price increases were factored in.
    And then we have the Bank of England who are expected to do their usual reaction to “inflation” and increase interests further. I wouldn’t put it past the idiot group think that we’ve witnessed this year in their rate setting for them to jump rates to 10% or even 15% by April 2023.
    So the real challenge is setting out an agenda for change in the new world that benefits all and not just the exceptionally well-off.

  • David Goble 27th Aug '22 - 9:13am

    I find the whole situation regarding the profits being made by energy companies truly obscene! As to the reaction, of lack of it from our “Government”; I have said before, quite a few times, that this Government has no sense of social responsibility.
    As to what to do; I have stopped my Direct Debit and am going to pay monthly for the energy that I used in the previous month. Yes, I appreciate that it will cost me more. However, my energy supplier increased by direct debit from £69 to £251 monthly and I did not feel that this was justified. I am currently using energy at about £90 monthly and am receiving e-mails telling me that they have a better deal for me at £350 monthly! I have asked them how £350 monthly is better than £90 monthly and have not received a reply. I have just sent them an e-mail telling them that I am now starting to feel that they are trying to coerce me into paying their extortionate direct debits.
    It also occurs to me: are these energy suppliers not abusing the direct debit system by initiating these huge increases? Could this be a point to be checked out by someone with legal knowledge of the direct debit and banking systems?

  • TAKE BACK CONTROL
    Until the 1980’s when the utilities were privatised by Margaret Thatcher they were in the Public Sector. And what a success privatisation has been. It has created dozens of millionaires paid for by the general public through higher gas, electricity and water bills!

    Therefore, instead of considering a “windfall tax” on these obscene profits why not re-nationalise and use the whole £30bn plus to reduce bills. And instead of considering stigmatising “handouts” to the least well off why not charge a reduced tariff for the first 12,000 kWh of gas, the first 1,900 kWh of electricity and first 127 litres of water (or even make them free) with the cost shared between increased charges for consumption above this level and taxation. It would benefit everyone but more particularly the less well off and small businesses through universal provision.

    There would also be other savings in that instead of a multitude of Chief Executives whose salaries range from £1m per year at EDF to £6.5m per year for the Chief Executive of The National Grid, there would be just three on public sector pay scales. What must it do to the morale and motivation of a low paid worker at the National Grid to know his Chief Executive is paid £6.5M? Such high salaries may prove counter productive in making the job that much harder and the service less, rather than more, productive.

  • The Lib Dems might now realise how austerity attacked the poor. As disa led I got Under £6,000 pa to live on, and redesigned a pensioner I get a whopping £8,000. Do something about it. Renationalise the national Al blood supply, ie fuel, energy, trains, water.

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