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Energy price cap rise – pushing millions more into poverty

Energy regulator Ofgem has just announced plans to raise the current price cap – a move that could affect 15 million households across the UK.

From April 1st, the price cap for the 11 million households on default tariffs will go up to £1,138. And for the 4 million other households using a pre-payment meter, the cost of energy bills could go up to £1,156. 

This disgraceful move will affect low-paid workers, the unemployed, families, and disabled or elderly people alike. For many people, needing to work from home during the pandemic will already have pushed up the heating bills, while the current £20 increase to Universal Credit payments is set to end in April, pushing even more millions of people into poverty. 

For those still on ‘Legacy Benefits’ instead of Universal Credit, including Employment and Support Allowance – a benefit paid on the grounds of sickness or disability – there never was a £20 uplift in the first place. The Citizens Advice Bureau (CAB) has calculated the £20 increase as being equivalent to “nearly a whole week (six days) energy costs for a below average income household.”

The title of Ofgem’s press briefing itself ‘helpfully’ advises us that “consumers should switch to save money”, putting the onus on ordinary people to simply choose a ‘better’ supplier, while ensuring that big business profits can continue to rise.

Fuel poverty – a scandal caused by the drive for profit

Behind this notion of ‘consumer choice’, however, is yet another damning indictment of capitalism and the energy industry in the sixth-richest nation in the world. 

Last year, an extra 600,000 households that owed energy bill arrears payments pushed the UK total up to two million. 

For example, in Doncaster alone, more than ten percent of people live in fuel poverty, not far off from the Yorkshire average. According to CAB research, almost seven million households are anxious about being able to pay their bill this winter.

At the other end are the bloated profits raked in by the energy monopolies in the UK; according to a CAB report called Monopoly Money: How consumers overpaid by billions’, data from 2016 and 2018 showed that the poorest people in society paid 14% of their income on just their water and energy bills.

The danger to health

Fuel poverty was a severe risk to people’s health and lives long before the Covid-19 pandemic. Research from 2014 explained the following:

Cold weather experienced in the winter months can affect or exacerbate a range of health problems, including respiratory and circulatory conditions, cardiovascular disease, mental health and accidental injury. In some circumstances, health problems may be exacerbated to a degree that they may cause death. In England, there were an estimated 29,200 excess winter deaths in 2012-13. Estimates suggest that some 10% of excess winter deaths are directly attributable to fuel poverty and 21.5% of excess winter deaths are attributable to the coldest 25% of homes.

According to National Energy Action (NEA), last winter saw 8,500 deaths because of cold homes; a 20% increase from the winter before that. The NHS lists of people who are either clinically extremely vulnerable, or clinically vulnerable, includes those who suffer with respiratory diseases such as COPD, asthma, bronchitis, and emphysema.

Cold, unheated homes, due to peoples’ inability to afford the bills given the poverty resulting from low wages, benefits, pay cuts under furlough or job losses, will not only exacerbate these health conditions, but increase the risk from Covid-19. The UK already has an appalling high death rate – more than 100,000 people – and the harsh experience of not being able to afford a properly-heated home is a disgraceful indictment of a system that is also responsible for funeral povertya housing crisis, and shambolic privatised care.

What do socialists say?

The Monopoly Money report mentioned above says that: “Companies and regulators must do a better job of demonstrating the virtues of our current model of ownership, or people will lose faith in it.” 

But we can have no faith in either companies who are purely driven by profit, and by ‘regulators’ who are squarely on the side of business interests. The ‘current model of ownership’ has failed to provide even a basic standard of living for millions of people, and no tinkering at the edges or moral appeals to the bosses will fundamentally help working-class people.

We say: 

  • No to raising the price cap! No-one should face the dire risk of a poorly-heated home for lack of energy, nor face the choice of whether to ‘heat or eat’. All debt arrears to be cancelled, with full financial support given to people who need help with current or future bills. For a mass programme of decent social housing construction.
  • We need a living wage and secure jobs for all, as well as an increase to benefits for those who need them. No to scrapping the £20 Universal Credit increase.
  • All energy companies should immediately be taken into public ownership, under workers’ democratic control and management. 
  • Capitalism puts our health and our lives in danger. Fight for the socialist transformation of society!

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