By Dr Harriet Thomson
Department of Social Policy, Sociology and Criminology, University of Birmingham
During the shock of the 1979 oil crisis, British civil servants coined the term ‘fuel poverty’ to describe households being unable to afford to heat their homes. Fast forward four decades, and we are yet again facing an existential threat from over-exposure to volatile global energy markets, and a national crisis of fuel poverty.
Last week, Cornwall Insights predicted the energy price cap could increase to £3,582 a year for a typical household from October 2022, and an eyewatering £4,266 a year from January 2023. While some doubt has been cast over Cornwall Insights’ association with the energy sector, it is hard to deny how bleak current energy trends are looking, fuelled by the ongoing war in Ukraine, growing demand for natural gas in China, and the UK’s over-reliance on imported gas.
Official fuel poverty statistics have a data lag of around 2 years, but early evidence from Citizens Advice paints a desperate picture. In the period June 2021-June 2022, Citizens Advice supported 10,802 people unable to top up prepayment meters, almost triple compared to one year prior. And this crisis is not simply an isolated issue for domestic consumers, it’s a threat to all hospitals, schools, and businesses. Indeed, chaotic energy market conditions have contributed to the collapse of around 30 energy suppliers since January 2021 alone, a situation that will worsen significantly come October if the 100,000 pledgees to the Don’t Pay UK campaign follow through.
We know from the extensive body of existing evidence that restricting energy services – such as heating, cooling, and use of appliances – can have serious adverse consequences for physical and mental health, social isolation, and educational attainment, with households forced to make difficult everyday decisions over whether to ‘heat or eat’. Moreover, these price increases are likely to push more people into using risky and/or polluting alternative energy sources, such as DIY candle heaters that have been linked to house fires, burning scrap wood and other flammable materials, and digging up peat. Aside from obvious risks to human life, these coping mechanisms will exacerbate climate change.
While the energy crisis is a complex issue that extends beyond national borders, it’s reasonable to ask what politicians have done to make the country more resilient? And in the case of the UK, the answer is not a lot. In fact, many recent policies have heightened the crisis:
- Roll back of progressive state-funded energy efficiency schemes
- Over-reliance on poorly trusted institutions to serve social functions
- Ultra-generous tax structures for oil and gas producers
It is widely accepted that energy demand reduction is the most cost effective and enduring solution for increasing energy resilience, with wins all round in terms of health, climate change, cost-of-living, supplier solvency, and green jobs. And yet, the various expressions of Conservative government since 2010 have chosen to systematically remove centrally funded grant schemes and replace them instead with regressive electricity bill levies, and a failed high interest loan scheme (the flagship Green Deal scheme in 2011).
A little under 9 years ago, Prime Minister David Cameron famously ordered aides to “get rid of all the green crap” from energy bills, a move estimated to have since added £2.5bn to energy bills. This has been accompanied by a distinct shift towards private energy companies delivering energy efficiency refurbs, and fuel poverty support, despite repeated evidence that energy suppliers are among the least trusted institutions in the UK. Compounding all of this is an ultra-generous tax structure for oil and gas exploration, with recent analysis showing that for every £100 investment in the North Sea, companies will only pay £8.75, with the remaining cost covered by tax subsidies. In short, billions of pounds of government funds are being diverted towards polluting projects that will take decades to realise.
Our energy systems are clearly broken and need radical reform, but so far proposals by leadership contenders Liz Truss and Rishi Sunak for tackling the crisis have been woefully inadequate. These include temporarily removing the 5% VAT on energy bills (~£160 per year), suspending remaining green levies (up to £157 per annum), and refusing to offer so-called ‘handouts’. If the next Prime Minister does indeed follow through with this line of thinking, we are going to see unnecessary suffering on an enormous scale.
What is urgently needed is immediate emergency support in the short term to help people with paying their energy bills, alongside rapid rollout of 100% tax-funded energy efficiency retrofits. In the medium term, it is essential that we rapidly ramp up the supply of renewable energy and phase out investments in oil and gas exploration, to avoid dependency on crisis-prone fossil fuels. Energy is a public good, with public externalities. It’s about time politicians treated it as such.