By Charlie Kimber
Downloading PDF. Please wait... Issue 2790

Bills will go up by a record 54 percent after energy price cap raised

Rishi Sunak announced a one-off discount of £200 for households—but it will have to be repaid
Issue 2790
Sunak stare down at his phone, a tapestry with lightbulbs behind him, pic illustrating story on the energy price cap

Chancellor Rishi Sunak is launching attacks on working class people (Picture: Treasury/Flickr)

The price cap on average fuel bills is to rise by 54 percent from £1,277 a year to £1,971 in April.

Regulator Ofgem decreed the new limit on Thursday, giving the green light to massive increases in bills for 22 million homes. The energy price cap applies to England, Wales and Scotland and takes effect in April.

The poorest people, those forced on to prepayment meters, face an even bigger rise from £1,309 to £2,017. A further increase of hundreds of pounds more is set to come in next winter after the cap is reset in six months’ time.

This is all the result of political decisions, not some inevitable force. Trade unions and campaigns have to resist on a far greater scale than anything seen recently. The rise is so huge that the government has announced some paltry measures to offset a portion of the cost. The Tories are scared that otherwise the rage over fuel bills could merge with the political crisis over Boris Johnson.

All households will receive a one-off £200 discount from October this year. But it’s a loan and will automatically be repaid from people’s bills in £40 instalments over the next five years. For ordinary people it’s severe pain postponed, not stopped. And most homes, those in tax bands A to D, will receive an average £150 rebate on council tax bills.

But that still means a big increase, and renters won’t receive the same discounts as home owners. There’s nothing to stop landlords pocketing the cash rather than passing it on.

The council tax savings will also be wiped out by the increase in National Insurance contributions due the same month. That will strip more than £200 out of the annual wage of a worker on £30,000.

Even after the government schemes, fuel stress—spending at least 10 per cent of a family budget on energy bills—is set to double to around five million families. 

Chancellor Rishi Sunak, a multimillionaire with a billionaire father in law, has put these measures in place to bail out the privatised firms in the hope that fewer people will default on their bills.  

The National Pensioners Convention says older people are already facing “life threatening heat or eat decisions”.

Sue, a 76 year old pensioner, lives alone and in fear of energy price rises. “I pay £64 a month for my gas at the moment and I’m already finding it difficult,” she told Socialist Worker. “The energy company told me recently that I was £112 in debt and that I had to increase my payments to pay if off.

“Then, after I did my meter readings, they said the debt had gone up to £139. I don’t know how people like me are supposed to manage on our pensions.”

Sue said her next door neighbour is finding it even harder because she needs to keep her heating on 24 hours a day if she wants to stay warm. “What’s it going to be like when the bills go up after this week? The cost of shopping has risen so fast recently I just can’t keep up,” she said. 

“I don’t think people understand how badly all this is affecting us pensioners.”

None of that is necessary. taxing the oil giants could provide all the money needed to freeze bills.

A few hours before the price rise announcement, British-headquartered Shell’s said its profits for 2021 had risen to £14.25 billion, up from £3.5 billion a year earlier.

Just for the three months to 31 December, Shell’s profits were £4.75 billion. “2021 was a momentous year for Shell,” celebrated chief executive Ben van Beurden. The firm said it would now shower money on it shareholders.

BP is expected to record a similar profit surge next week. Shell’s figures echoed those of US majors ExxonMobil and Chevron, which in the past week have reported net annual profits in 2021 of £17 billion £11.5 billion respectively.

Even the impeccably pro-business Labour Party called earlier this week for a one-off windfall tax on these profits. The move was backed by the Lib Dems—but not the Scottish National Party (SNP). One SNP MP disgracefully called it a “smash and grab” on the corporations.

But the Tories won’t increase tax on the oil giants unless there is mass revolt. Energy prices are the sharp end of a broader assault on living standards with rising prices, tax increases and wages falling once inflation is taken onto account.

The Bank of England on Thursday warned that households face the worst squeeze on their disposable incomes for at least 30 years, with official inflation rising to 7.5 percent, economic growth slowing, unemployment rising and taxes going up.

The Bank then added to the squeeze by raising interest rates by a quarter point to 0.5 per cent, the first increase in rates in consecutive meetings since 2004. It will mean a rise in mortgages and loan rates. 

Trade unions and campaign groups need to unite around a few simple demands. These could include full support for those who cannot pay their bills and physical mobilisations to stop cut offs and to restore power. And demonstrations and political strikes against the price rises.

Instead of soaring bills and meagre temporary handouts from the government all the privatised firms should be taken back into democratic public ownership—which Labour won’t call for. That is the only way to plan for an energy system that delivers power to people without outrageous bills and protects the environment.

  • Demonstrations backed by the People’s Assembly, “Cost of living crisis, we can’t pay”, Saturday 12 February, 1pm, in London, Glasgow, Manchester, Bristol, Newcastle and Nottingham. Details here

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