Wholesale natural gas prices have skyrocketed by 250% since the start of 2021. Energy firms in Britain have been going bust on an almost daily basis and energy bills have gone through the roof: gas bills rose by 28.1% in the year to October, while electricity climbed by 18.8%. It is the poorest sections of the working class who are being made to pay for capitalism’s inability to rationally plan society to meet long-term need. MARK MONCADA reports.
There has been a record rise in the cost of living with inflation jumping to 4.2% in October – the highest level in a decade, and up from 3.1% in September. It is forecast to hit 5% by April 2022. Chief economist for the Office for National Statistics (ONS) Grant Fitzner stated, ‘This was driven by increased household energy bills due to the price cap hike’. The governor of the Bank of England, Andrew Bailey, stated that record gas prices were the key driver of inflation. He conceded that millions of families are facing a cost of living crisis.
Wages are not rising as fast as inflation and Universal Credit (UC) has been cut by £20 per week. The Institute of Fiscal Studies (IFS) has stated that households now face extra costs of up to £2,000 per year, just under £40 per week. The IFS calculated that an average worker would need a pay rise of over 7% just to maintain their standard of living.
The energy bill price cap, which is reviewed every six months (with changes coming into effect in April and October), was introduced in January 2019 ostensibly to safeguard people from hikes in prices that result from market forces. However, the cap was increased by an unaffordable 12% to £1,277 a year on 1 October 2021 – £139 more than the previous cap, and a total increase of £235 in 2021 alone. By April 2022 it is expected to go up again to £1,660 a year – a 30% increase on the rise implemented in October. In the midst of a wholesale gas price crisis, the cap offers no protection to the poor but rather safeguards the profit interests of the largest private energy companies in Britain while forcing smaller ones out of business.
As we go to press, 25 energy companies have gone bust in 2021. In early November six small firms collapsed in the space of just three days – four of them in a single day. More companies are on the brink of going bust, and no longer just the small ones: Bulb, Britain’s sixth largest provider, went under on 23 November; it had 1.7 million customers. Two days later, two further suppliers followed.
No room for manoeuvre
The price cap affects 15 million households – more than half of all households in Britain. The End Fuel Poverty Coalition has stated that there were more than four million households living in fuel poverty before the October hike. This includes 1.4 million households with at least one child, one million older households and one million households in severe fuel poverty. The increased cost could push a further half a million households into a position where they cannot afford to keep their homes warm and dry. According to National Energy Action, already around 10,000 people die every year from the effects of a cold home. Elderly people and those with health conditions are particularly affected.
The Food Foundation conducts research into household food insecurity every six months. A household is classed as ‘food insecure’ if anyone in it has smaller meals than usual or skips meals, if they have ever been hungry but not eaten or not eaten for a full day because they cannot afford or get access to food. In its most recent survey, it found that 5.2 million adults are experiencing food insecurity and 2.3 million children directly faced food insecurity in August. For children, being food insecure includes relying on a few kinds of low-cost food, not having a balanced meal, not eating enough or missing meals because food in the house has run out and the family are unable to get more.
The United Nations Food and Agriculture Organisation have stated that global food prices have hit their highest level in over a decade after rising by more than 30% in the last year. Vegetable oil prices hit a record high, rising by almost 10% in October. The price of wheat is up almost 40% in the last 12 months. In Britain, the ONS says food inflation – how much food prices rise year-on-year – quadrupled from 0.3% in August to 1.2% in October. Prices are set continue to increase well into 2022.
New Joseph Rowntree Foundation research, Dragged Down by Debt, found that 3.8 million low-income households across Britain are in arrears: they have fallen behind on paying £5.2bn worth of bills (this includes household bills and loan repayments); 4.4 million have had to take on new or increased borrowing through the pandemic, totalling an estimated £9.5bn.Households are disproportionately more likely to be in arrears if they are young, BAME, have children in their household, live in London and are in receipt of UC. Low-income UC recipients are one of the hardest hit groups, with 70% in arrears even before the cut to UC had taken effect. 40% of UC claimants are not confident they will be able to pay their bills in full and on time in future, and 35% are not confident they will be able to avoid taking on more debt. Around half are planning to cut back on essentials like food. It is clear there is no room for manoeuvre for the poor as the ‘let the market decide’ ideology will ensure they freeze this winter.
Fight Racism! Fight Imperialism! No 285, December 2021/January 2022
