By Sarah Bates
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Energy bills still high as Truss protects profits for the bosses

This article is over 1 years, 7 months old
Truss’s £150 billion scheme guarantees profits for the bosses
Issue 2822
Don't Pay protesters outside Ofgem with placards such as "Blood on Ofgem's hands" and "People not profit"

A Don’t Pay protest over energy bills at regulator Ofgem in London recently. The Tories knew a social explosion was coming (Picture: Guy Smallman)

New prime minister Liz Truss has promised action on gas and electricity bills, claiming on Thursday a plan to “give people certainty on energy bills”. She also said it will “curb inflation and boost growth.”

The reality is very different. Truss has been forced to act because the 80 percent rise in bills scheduled for three weeks’ time—and then far higher charges in January —would have caused social devastation. And it would almost certainly have seen an acceleration in mass resistance.

But the expected £150 billion cost of the scheme isn’t coming from the energy firms, even though they are awash with profits. The price crap will be replaced by a new “Energy Price Guarantee”. It limits how much suppliers can charge customers per unit of gas and electricity.

For a “typical user” it still means an annual bill of £2,500. Many people will be breathing a sigh of relief that the cap won’t rise to the £3,549 rate that was set to kick in on 1 October.

Yet, even if prices are kept the same, energy bills have doubled in 18 months.

And it’s not certain who will benefit. Those on prepayment meters, and those who pay their bills quarterly, will still pay more per unit of energy used.

For others, who are locked into fixed-rate deals, or pay their energy bills to their landlord, it’s unlikely they’ll see their bills go down.

The exact details of how the new deal is being paid for won’t be announced until a statement by chancellor Kwasi Kwarteng, probably on 21 September. But government briefings say the money would, at least initially, be borrowed.

So the Tories have refused taxation on the £170 billion projected “excess profits” of the British gas producers and electricity generators over the next two years. And Truss has rejected the most obvious move—to nationalise the whole sector under democratic control. This would wipe out the profiteering, the vast sums for wealthy shareholders, and the payouts to fat cat chief executives.

Instead, the borrowing could in the long-term be recouped by higher taxes on ordinary workers or future price rises. It is state aid for private producers. This is reinforced by the announcement of a £40 billion scheme from the Bank of England to “provide liquidity” to energy retailers.

“With the Bank of England, we will set up a new scheme worth up to £40 billion to ensure that firms operating in the wholesale energy markets have the liquidity they need to manage price volatility,” Truss said.

And the Labour Party, amid a sense of rising anger over the profiteering of the energy magnates can’t bring itself to call for public ownership.

Instead, the solution offered is a so-called “windfall tax”—a higher level of taxation on just a portion of the companies’ skyrocketing profits.

Another central part of Truss’s is her drive toward environmental destruction under the guise of building a cheap domestic energy supply.

Truss wants to overturn a previous ban on fracking for shale gas. And she wants to open up a new round of bids for companies to extract oil and gas from the North Sea.

And Truss is planning to fix the rates of nuclear and renewable energy to a lower rate than gas to drive supply.

Truss also announced a review into how Britain can keep to its climate commitments “in a way that is pro-business and pro-growth”. And she wants to make Britain a net energy exporter by 2040.

Truss’s moves aren’t powered by a sense of concern for ordinary people’s lives. Instead, it’s a desperate bid to win popular support to solidify her new premiership in a deeply divided Tory party.

Thursday’s announcement shows a number of things about the current political situation. 

Firstly, as during the onset of the Covid-19 pandemic, even the Tories most hostile to state intervention will change their minds once the system starts to look shaky enough.

The Energy Price Guarantee is partly driven by a concern that small businesses will completely collapse this winter, leading to mass unemployment and recession and that people won’t be able to pay their bills, bankrupting the energy firms.

It does also show that the threat of resistance from below can help push those in office into action.

Strikes, protests and mass rallies are fuelling a sense of the start of a fightback.

Had people not begun to organise—in their workplaces, and in their areas—it’s probable that even less action would have come from Number 10.

That makes it even more important, not less so, to keep up the pressure. Gas and electricity bills were the most obvious face of the crisis, but rises in food, rents, transport, mortgages and much else mean the social emergency is far from over.

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