Last Friday, the energy price cap rose by 80%, threatening (and this is not polemic hyperbole) unprecedented fuel poverty for millions of households, and destitution for hundreds of thousands of the poorest households who are already struggling with impossible choices between having heat and hot water in their homes or putting food on the table. Yet Friday’s devastating news was by no means the worst of it, as the energy price cap is predicted to soar by similar amounts in January and again in April. By then it is forecast that the average household could be looking at bills of £7000 a year. We are now reaching the point where, for many people, it will no longer be a question of struggling to pay their energy bills, it will simply be impossible for them to pay. If you take home the average UK annual salary of £31700, you are going to have to juggle soaring energy bills with rising costs of food and other essentials, increasing housing costs as interest rates go up, affecting mortgages, or rising rent bills. However, if you are on a minimum wage or dependent on benefits, the increase in energy bills means that you will just not have the money to pay, no matter how you budget.
This is a truly terrifying development for millions of people, yet the so-called ‘leaders’ of the British Government were nowhere to be seen when the news broke. No British Government minister was roused from his or her slumber to make the rounds of the TV studios and provide even a modicum of reassurance to worried and frightened people left to deal with the consequences of the meltdown of an energy policy which is the brainchild of that government whose leaders were last seen sunning themselves on a Greek beach.
We did, however, get a statement from the acting, or rather play-acting, Chancellor, Nadhim Zahawi, saying that people needed to look at reducing their energy consumption. Glossing over the fact that this is pretty rich coming from a man who attempted to claim the heating costs for his stables on his parliamentary expenses (Zahawi’s horses will be warmer this winter than millions of families), it was a gob-smackingly arrogant statement which effectively tried to shift the responsibility for the catastrophic failure of the Conservatives’ energy policy on to those who are suffering because of Tory mismanagement.
According to Dr Sean Field, Research Fellow at the Centre for Energy Ethics at the University of St Andrews: “To put it bluntly – there is corporate responsibility in this, but this has been a catastrophic failure of political policy in the UK for the last 15 years.”
What all the various crises besetting the British state have in common is that they are the result of decades of British governments prioritising short term private profit making over the longer term public good - the promotion of capitalist policies over socialist policies which are for the benefit of the people - you and me. The crisis in England’s water supply is due in part to private companies which preferred to cream off profits rather than invest in fixing leaks and building reservoirs to store the winter rains. Problems have been ignored for decades. Even now the Conservatives prefer to pander to the fossil fuel companies rather than fund the transition to renewable energy and funding the insulation of the housing stock or other long term solutions to the energy crisis. Liz Truss talks about abolishing the Green Levy on fuel bills and her party wants to prohibit on-shore wind farms, because, apparently, those are the problem, not the profiteering of the oil and gas giants.
Remember that the Conservatives permitted the energy companies to give up on gas storage facilities, meaning that the UK is hugely dependent on ‘just-in-time’ gas supplies from Europe to meet domestic needs. This deprived the UK of the ability to store large quantities of gas when the international market price was low and leaves the UK more vulnerable to large rises in prices on the international markets. We got into this position due to a combination of corporate greed and UK government failure. While the international wholesale price of gas was low, it was more profitable for the energy companies to buy on the international markets than to invest in maintaining and repairing the storage facilities which existed at the time and the Conservative Government refused to grant a subsidy to help with the maintenance and repair costs of the existing gas storage facilities. The companies then announced that it was not cost effective to keep the storage facilities open and decided to close them down. The Conservative government compounded its sins by allowing them to do so.
We are now seeing those same companies reporting record profits while the Conservative wring their hands and bleat that “there’s a war on” even as they refuse to impose a windfall tax on the energy companies that could go a long way towards funding a freezing of the energy price cap. In this crisis, as always, the priority of the Conservatives is to protect the profiteering of the wealthy while ordinary people are forced to choose between freezing or starving. This is a catastrophic political and moral failure, the blame for which lies squarely at the door of the Conservative party.
Even now, the Conservatives remain missing in action, more concerned about their internal party politics than the disaster facing millions. Neither of the two leadership contenders have said what they intend to do to deal with a crisis of their own party’s making. Truss’s camp has hinted that if she becomes Prime Minister she is considering cutting VAT by 5% across the board. However VAT accounts for less than 5% of the typical energy bill so a VAT cut would do little to reduce energy bills to an affordable level.
A reduction in VAT is effectively a tax cut for the better off. If you wanted to put more money into the hands of the sort of people who have high levels of discretionary spending, and the higher the discretionary spending the more money they’d get, then cutting VAT by 5% is what you’d do. It will do almost nothing to help make energy more affordable. To save £1,300 from a 5% cut in VAT, you’d have spend £31,200 a year on stuff that incurs VAT at 20%. There is no VAT on food or children’s clothing. VAT is not normally charged on rent or mortgage payments. A cut in VAT does nothing to help those who can only afford the essentials, yet this is her big idea, her ‘nuclear option’. It’s only nuclear in the sense that it will not solve the problem and will leave devastation in its wake. Truss’s resistance to offering targeted support for vulnerable groups is terrifying and unforgivable. Public anxiety is now raw, the fear is naked.
Adam Scorer, chief executive of National Energy Action, a campaign group, told the financial news site Money Week that cutting VAT will do little to give consumers respite from soaring energy bills because VAT accounts for only a minor proportion of the overall bill. The only realistic solution, in order to prevent millions from being unable to heat their homes is a freeze on the energy price cap ,funded by taxes on the energy companies, as called for by the Scottish First Minister and Keir Starmer of the Labour party. Ideally the energy companies should be nationalised But only the British Government has the legal power and the financial authority to do so and the Conservatives won’t go there. They will protect their corporate donors no matter how many elderly or disabled people die of hypothermia this winter.
The whole debacle is a problem that can only be solved by government. But Truss won’t let humanity get between her and a burning ambition that makes her pander to the worst right wing excesses of the Conservative party. She is going to be a far worse Prime Minister than even Boris Johnson. The only question is how much damage she will do before she, in her turn, is finally forced from office. And she will be, she will be.
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