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Monday, March 20, 2023

High Energy Costs are Crippling Working UK Families

Tia Rutherford is concerned about her kid, who is three years old.

She placed fleece blankets over her doors and windows to keep the cold out last autumn as energy rates skyrocketed, and she began giving Jacob breakfast in his room so she wouldn’t have to heat the living room. But she’s gripped with fear that she won’t be able to pay her expenses and that her son will be cold.

“It’s having an influence on his health,” Rutherford, a 29-year-old single mother from southeast London, said. “He gets colds all the time.”

People throughout the United Kingdom will face similar decisions in the coming months, with energy bills expected to climb by 54% for millions of homes on Friday. It’s the second major increase in energy costs since October, and a third might be on the way as demand picks up following the COVID-19 outbreak and now Russia’s war in Ukraine.

The biggest cause of growing consumer prices is energy costs. While inflation is a global occurrence, it is a greater concern in the United Kingdom since it is more vulnerable to rising natural gas prices than its gas-dependent European neighbors, whose electricity bills and other expenditures have also risen. Natural gas prices, which are used to generate power and heat, have more than quadrupled in the last year.

Economists in the United Kingdom are predicting the largest loss in living standards since the mid-1950s, owing to rising energy prices, food prices, and anticipated tax rises. According to the Office for Budget Responsibility, disposable family income will decline by an average of 2.2 percent this year, adjusted for inflation.

These estimates hide the impact of the crisis on low-income individuals, who have been disproportionately affected. According to the Joseph Rowntree Foundation, a think tank focusing on raising living standards, the poorest quarter of British households will see their real wages fall by 6% this year because they spend a bigger percentage of their budgets on food and energy.

People who rely on government benefits and state pensions are being pushed twice as hard since their yearly cost-of-living adjustments are based on annual inflation estimates through September – before consumer prices skyrocketed.

As a result, benefits are only expected to climb by 3.1 percent this year. However, inflation hit a 30-year high of 6.2 percent in February and is anticipated to hit approximately 8% this year as the conflict drives up food and energy prices, according to the Bank of England.

People are relocating their mattresses closer to windows as expenses rise so they can read by the light of the streetlamps outside, according to outreach workers at Christians Against Poverty, a debt counseling organization. Divorced dads skip meals to save money so they can purchase food for their children when they visit, and a rising number of people say the pressures have led them to consider suicide.

The charity’s external relations director, Gareth McNab, stated, “The cost-of-living problem is truly costing lives.” “The energy crisis and incapacity to cope are mentioned in almost every contact to our new enquiries team. And, yes, it’s a desperate situation out there.”

The national price cap will be updated on Friday, causing energy prices to climb for 22 million homes. It is adjusted every six months by regulators. Analysts predict that the cap will rise for the third year in a row later this year, leaving households with power costs that are more than twice what they were a year ago.

In comparison to other European Union countries, Britain depends more heavily on natural gas to cover its energy demands, with less nuclear and renewable energy. Britain has also lagged behind its peers in insulating and sealing the nation’s elderly housing stock, making it more energy intensive to heat them.

Five years ago, Britain’s main gas storage facility was permitted to collapse, leaving the nation with only 12 days of supply capacity, compared to around 80 days in Germany, which is likewise largely reliant on natural gas. As a result, in times of crisis, Britain is increasingly reliant on buying gas on “spot markets,” which reflect short-term price fluctuations.

“In normal times, we use more energy to heat our homes than (Europeans), but… the price is low enough that you don’t really feel a large difference in the cost of living,” said Arun Advani, a University of Warwick inequality specialist. “They are paying more now that energy costs are rising, but we are paying a lot more.” As a result, the disparity is amplified.”

Nonetheless, several European governments have pursued cost-cutting measures more vigorously than the United Kingdom. This year, France pushed a state-owned utility to cap power price rises at 4%. Spain enacted a tax on windfall profits from energy companies, which would be passed on to consumers.

In February, Britain replied with a 9 billion pound ($11.8 billion) program aimed at reducing growing power rates. Last Monday, Treasury Secretary Rishi Sunak announced more measures, including a reduction in the tax on automobile fuels. He, on the other hand, has refused to put a tax on manufacturers’ windfall gains or to postpone a 1.5 percentage point hike in income taxes, which is slated to take effect in April.

Sunak stated that the government must keep spending under control despite the uncertainties created by the Ukraine conflict and after the national debt reached its highest level since 1963 last year.

Sunak was chastised by lawmakers from all parties for missing the point, implying that he was unaware of the magnitude of the crisis facing low-income people. But he’s not going down without a fight.

In the meantime, many who have little are attempting to live on even less. Food bank consumers are skipping up potatoes and other root vegetables because they must be prepared, according to Chris Price, who heads the Pecan community charity in south London.

“People are saying, ‘I need food that I can prepare quickly and cheaply because putting something in the oven for too long uses a lot of… power or gas,'” he explained. “And they’re not sure if they’ll be able to pay it.”

According to Adam Scorer, chief executive of National Energy Action, a charity focusing on fuel poverty, these are the individuals who have been affected hardest by the epidemic and subsequent government benefit cuts, leaving them with little to fall back on in the new crisis.

“I’m not going to cut back.” Scorer stated, “There are no wise decisions.” “You just do not heat your home, do not use your stove, do not heat water, and do not shower.” You just do not perform such things because you are unable to do so. For many people, there are no options.”

Rutherford is one of those people who has run out of options.

She obtains her electricity via a prepaid meter, which is sometimes the only option for folks who have fallen behind on their payments. Customers with prepaid meters can choose how much they use, but they pay exorbitant costs and risk losing electricity if they run out of credit.

As a result, she is unable to fill up the meter, pay off the debt she owes her energy provider, and keep her kid warm when he returns home from daycare. She’s attempted to save money by shutting off the lights and living in the dark, with the exception of a few strings of tiny white Christmas tree lights that consume less power.

She explained, “I didn’t have to live like this previously.” “I actually don’t have any money — and my power is about to go off.”

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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