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Writer's pictureMorgan Forbes

How is the UK Handling the Energy Crisis?


As energy bills are forecast to rise by over 50% in the month of April (Taylor, 2022), an estimated 22 million British households will feel the squeeze that is already so tight on their finances. With unprecedented increases in gas prices around the globe (not helped by low inventories and Russia, one of the world’s biggest gas suppliers, reducing its supply to EU countries), energy regulators Ofgem are raising the price cap to a level never seen before, with much of the population predicted to see their spending go up by almost £700 a year. The UK still relies heavily on gas for its power despite the country’s investments in other energy sources such as solar and wind power, so while this rise will come as an unwelcome shock to most, it is no surprise that we will feel the worst of it in comparison to other countries who aren’t as dependent. However, the real question is how we can tackle this issue — do we make a promise to turn further towards alternative power sources in the future? And more presently, as the cost of living surges as a whole, what support can we expect from the government as many families face being pushed into poverty?


Too often the burden of high living costs has fallen on individuals. Their seemingly poor choices — taking longer showers, keeping the heating on at night, not switching off lights and wasting water — are blamed for the gas and electricity bills being so substantial each month. However, such choices are not always luxuries to be taken for granted. For example, those living with disabilities require a more constant cover of heat in their homes, or will take longer to complete activities that require higher energy consumption such as washing the dishes. Those with children or otherwise a lot of people living under one roof will know too well how long the washing machine cycles on for each day. With inflation climbing to 7% in March (Wearden, 2022), consumer prices for most goods have climbed with it. For many families, it has become a sadly inevitable and everyday part of life to choose between heating and food security. Why must accountability consistently fall on them?


It is important to see how the Conservative government has responded to the situation. Rishi Sunak, British Finance Minister, has announced that most citizens paying an electricity bill will be eligible for a £200 discount from October, which will later be paid back in £40 instalments over the course of five years. In addition to this, households will be offered a £150 rebate on their council tax. Many have so far complained on several accounts: that it has taken too long to come up with this solution, that the money shouldn’t have to be repaid, or that it is simply not enough. As October is the month that the price cap goes up by another 30% (Abbott, 2022) and the cold winter months loom, the former discount does not begin to cover the increase in costs, and citizens are left questioning why this money (effectively an interest-free loan) is an automatic and mandatory handout. It seems strange that there is no opt-out option and a petition to allow customers to refuse the rebate has received almost 12,000 signatures at the time of writing. Only 10,000 signatures are required on any public petition to incite a government response, so we have yet to see how seriously this will be taken. The thought of owing money can cause anxiety for those already under financial strain, and the petition description cites that waiting to pay back the loan will be disadvantageous to those who will see relationship breakdowns and children leaving home.


An aspect causing even more stir is the fact that the latter discount will be deducted from council tax — which is paid either annually or in instalments at certain times of the year — and as such recipients will have to wait to receive the benefit. Additionally, certain groups of people such as full-time students who are exempt from paying council tax, but who often do not have the schedule alongside university for working enough to cover their expenses, are left in the dark. Overall, it appears the majority of the population who will suffer due to the energy crisis have at least one problem with the Tories’ offerings, piling pressure on to a government that is already questioned and resented by so much of the working class.


On the other hand, within the confines of parliament, several Conservative politicians have suggested that the Prime Minister should abolish energy taxes (Culbertson, 2022). MPs and others have addressed a letter to Boris Johnson and Rishi Sunak, explaining that ‘“we have almost uniquely caused our energy prices, through taxation and environmental levies, to increase faster than those of any other competitive country”’, adding that it is the lowest-paid citizens of the UK who feel the brunt of the crisis. They have requested that the PM get rid of the 5% VAT that goes towards renewable energy schemes, as this could save a regular household up to £200 on their bills. The pressure mounts on Johnson and his party to do more and as the year progresses, the general population will only become increasingly frustrated.


Figure 1: Energy Crisis imagery, MarketWatch.


Morgan Forbes (IG: @morganforbesart)

Edited by Charlotte Lewis (Editor-in-Chief)

References


Abbott, L. (2022). ‘What is the £200 energy bill loan, can I opt out of the scheme and do I pay it back if I move house or leave home?’, Grantham Journal [online]. Available at: https://www.granthamjournal.co.uk/news/when-will-i-get-the-200-energy-loan-9248367/ (Accessed 13/04/22).


Culbertson, A. (2022). ‘Conservative MPs urge Boris Johnson to scrap taxes as bills rocket’, Sky News [online]. Available at: https://news.sky.com/story/amp/energy-crisis-conservative-mps-urge-boris-johnson-to-scrap-taxes-as-bills-rocket-12507516 (Accessed 13/04/22).


Taylor, C. (2022). ‘UK energy bills to rise by over 50% in April as regulator announces hike’, CNBC [online]. Available at: https://www.cnbc.com/amp/2022/02/03/uk-energy-bills-to-rise-by-over-50percent-in-april-as-ofgem-announces-hike.html (Accessed 13/04/22).


Wearden, G. (2022). ‘UK inflation hits 7% as cost of living crisis deepens - business live’, The Guardian [online]. Available at: https://amp.theguardian.com/business/live/2022/apr/13/uk-inflation-cost-of-living-prices-food-energy-tesco-stock-markets-business-live (Accessed 13/04/22).


Petition to ‘allow consumers the right to refuse the £200 energy rebate’: https://petition.parliament.uk/petitions/608007




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