ALL praise to Martin Lewis. As Cabinet ministers kept their heads down, none more so than Boris Johnson, revelling in his role as Prime Minister In Name Only, Lewis, the journalist and money-saving expert, was on the airwaves early, warning in outspoken terms about the consequences of the fearsome price of energy.
At 7.09am Ofgem announced that from October 1 the typical bill for gas and electricity will be £3,549 a year. Twelve months ago, it was £1,100; currently, it is a fraction under £2,000. The new rate, which will affect 85% of homes in Scotland, England and Wales, is crippling, but even worse is expected in the new year.
Ofgem’s chief executive, Jonathan Brearley, acknowledged that the October rise would be devastating for many families, and said that enormous price-spikes in the market had been caused by Russia gradually shutting off its gas supplies to Europe. Winter prices are now 15 times the normal price that had led to last year’s £1,100 bill.
Without peace breaking out in Ukraine – an exceedingly unlikely prospect as things stand – energy companies will face higher costs, to be passed onto the consumer, he added.
There is no gainsaying the severity of the crisis that vast numbers of vulnerable or low-paid households now face. Citizens Advice Bureaux reports seeing more and more people hanging on by their fingertips, unable to afford another increase in bills.
The End Fuel Poverty Coalition warns that for the 4.5m customers on pre-payment meters, the new rise will go up to £3,608 and that the price hike risks pricing people with lung conditions “out of breathing”, winter being the worst time of year for them. The Joseph Rowntree Foundation speaks of some households being rendered destitute as they could have to devote their entire income to energy bills.
Charities and consumer watchdogs fear that 8.5m people will be mired in fuel poverty. Many poorer-off people, including pensioners, are minimising energy consumption, thinking twice before using the shower, washing-machine and vacuum cleaner. And all of this at a time when food and fuel costs are sky-high.
Mr Lewis’s anger was unmistakable. The situation is now “absolutely horrendous”. The new price-cap, he pointed out, is fully 37% of the new state pension, and a larger proportion of the old state pension for people who had retired earlier. Those on basic universal credit would also suffer markedly.
To those who accuse him of catastrophising he responds that this is now a catastrophe. He echoed Mr Brearley’s call for government intervention and said that if state aid (beyond that already on its way) is not forthcoming then too many lives to count will be lost this winter.
Mr Lewis made the forceful point that the £3,549 figure is simply an average for householders on direct debit, being a cap on unit rates and standing charges, and that there is no cap on the maximum amount that householders can pay. Theoretically, a household with disabled adults or children, and required to use specialist electrical equipment, could pay as much as £10,000 a year.
Mr Lewis and some energy companies have called for the abolition of standing charges, currently £280 a year even for customers who use no gas or electricity but merely have meters. This proposal sits uneasily with Citizens Advice, which says it will affect vulnerable customers who have high usage, and that separate help will be needed for them. Such aid can only come from government – but, as Mr Lewis again pointed out, we do not, at the moment, have a government that could initiate such assistance.
He has been predicting a cap in excess of £3,000 since March. Why, he asked, have we got to the Ofgem announcement without any further government aid for householders? “This is not good government”, he said, his anger and frustration evident. “It is not good politics, either”. Later, he said it was "frankly irresponsible " not to have help in place so that people would know what was on the way.
It has to be conceded that external factors have impacted on energy prices, and that targeted state aid has already been delivered. Mr Johnson now says his successor will announce further support for customers next month. Nadim Zahawi adds, almost as an afterthought, that we should look afresh at our energy consumption – a line that contradicts No.10’s recent assertion that we will have the gas and electricity we need.
Regardless of the disruption caused by the leadership contest, the Conservatives ought to have been front and centre on energy bills, at least trying to assuage some of the panic and despair that millions of people now face. Labour’s call for winter energy prices to be frozen, to be paid for by an extension of the windfall tax on oil and gas companies, may or may not be realised, but it is the kind of pro-active thinking that the government seems unwilling to countenance.
The price-hike could also help trigger a recession. The more we must pay for gas and electricity, the less we will necessarily spend on other things. Small- and medium-sized businesses are feeling under pressure from multiple directions. Many could go under.
There are better-off householders who can afford – just – to meet the energy bill but for millions of others it will be a profound struggle, particularly in a cold, bleak winter. At £33bn government assistance thus far has been generous, but more is needed. It will be hugely expensive and will have to be paid for at some point; but there is no more urgent matter than this for the next Prime Minister.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel