Rise in energy bills shows the limits of Burnham’s Labour

Burnham insists there is little the government can do about the cost of living crisis (Photo: number10gov/Flickr)

Andy Burnham walked into Number 10 North with a promise to “put more money in people’s pockets and bring back hope”.

This was thrown into doubt on Wednesday by the rise in energy bills.

The Ofgem energy regulator confirmed that the price cap would be lifted again, reaching a three-year high. It means the typical annual household bill will be £1,723 from 1 October, an increase of about £60.

It wipes out the £45 per year saving from Burnham’s cut to VAT on electricity bills.

And prices are forecast to rise by a further 9 percent in January 2027.

Most workers haven’t seen their pay rise nearly as much. The average annual wage growth stands at 3.5 percent annually.

The rise in energy bills looks set to make ordinary people’s lives even harder as they prepare for colder weather. And, it is already starting to push up inflation.

As Ofgem made its announcement, its own workers, members of the PCS union, were on the picket lines as part of a three-day strike.

One PCS member told the union they were worried about becoming homeless if costs continue to skyrocket.

“I struggle each month to actually put food on the table,” they said. “I don’t know how you’re meant to support a family let alone have any unexpected costs.”

Another said, “The financial pressure is constant and overwhelming. I feel like I’m being pushed to the limit by costs that keep rising while my income stays the same. It’s becoming increasingly difficult to stay afloat on my own.”

Older people will be even harder hit. Caroline Abrahams, director of the charity Age UK, said, “Today’s news will ring alarm bells for those older people who have repeatedly faced tough choices during the last few years of energy price hikes.

“They now have nothing left to cut back on,” she added.

Burnham has said he recognises that the price rises are “difficult for people”, but insists there is little the government can do.

“We know the price cap will have an impact, but it is what we can do right now,” he said.

“We’ll continue to look as we go forward at how we get energy prices down in the long term.”

The Labour government is severely constrained by the global economic situation.

Energy prices are on the rise due to the US war with Iran and the effective closure of the Strait of Hormuz.

Although the price of oil has fluctuated over the past six months, it is still much higher than it was before the start of the conflict.

And the government can’t simply borrow more to spend.

Governments sell bonds to investors to fund debt repayments and public spending.

But the interest rates—or yields—they have to pay out to attract investors have risen to highs not seen in 20 years. Investors are rushing to sell off their bonds. This includes some who prefer to invest in the artificial intelligence (AI) boom instead.

Burnham once said that he didn’t want to be “in hock to the bond markets”. But things look very different now he is in office.

There are things Labour could do to address the cost of living crisis. Socialist Worker has called for price controls, pay restoration and a tax on the richest, for example.

Six ways to hit back at the cost of living crisis

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But that would require a much bigger confrontation with capital than Burnham wants to stomach.

Last month, a Labour spokesperson said, “Andy is exploring all possible options for giving the public more control over essential services like water and energy.”

But it was always unclear what exactly “more control” would look like. Burnham has backed off from nationalising Thames Water, let alone taking on one of the big energy companies. The energy giants continue to pocket huge profits while our bills keep going up.

Unfortunately, unions have not so far been able to build a fightback that matches the scale of the crisis facing workers.

For example, the Unison union recently accepted a 3.3 percent pay uplift in local government after failing to meet the strike ballot turnout thresholds in the larger local government workplaces where it organises.

Unions will need to be much bolder to give people real hope again.