As household expenditures, particularly energy bills, continue to rise in the UK, the issue of fuel poverty is becoming increasingly pronounced. Charitable organisations in the UK have sounded the alarm, reporting a 2.1 million increase in people seeking assistance since March last year. Shockingly, as of April, one in 10 adults in the country struggled to meet their energy bills. The pressing question that arises is: how many Britons are now unable to pay their energy bills? Additionally, what measures has the Rishi Sunak government implemented
The inability of 5.5 million people to pay their bill
Approximately 5.5 million individuals could not cover their energy expenses, with one in 10 adults failing to meet their energy bills in April, primarily due to the escalating cost of living crisis, as indicated by a study conducted by Money Advice Trust. The research reveals a surge in unpaid household bills, which has risen from 7.9 million to 11.6 million. The outlook for future energy costs in British households appears disheartening.
The British need urgent government help.
Additional studies have revealed that one in five individuals receiving benefits like Universal Credit have experienced food shortages within the past three months. In response, charitable organisations have contacted the Minister of Energy, requesting support for the assistance to pay scheme. Joanna Elson, the head of the Money Advice Trust, emphasised the need for immediate action, stating, “As an increasing number of people struggle to keep up with energy and essential expenses, and millions face unmanageable repayment demands, it is crucial to provide everyone with a viable path to escape debt.”
Eliminate meals to pay for expenses.
In a separate recent study, it was revealed that nearly 2 million individuals in the United Kingdom forego an entire day’s worth of meals three times a month, a consequence of the increasing cost of living. Concurrently, The Guardian reported some time ago that economists had cautioned British Prime Minister Rishi Sunak about the implications of high inflation. This inflationary pressure, prompting the Bank of England to raise interest rates as a measure to control inflation, has raised concerns that the UK is likely to slip into a recession next year.
A severe economic recession awaits the UK.
The economic recession has a long-term impact on consumer budgets. These economists predicted that the Bank of England would have to push the country’s economy into recession to curb inflation. The bank has set the stage for further increases in borrowing costs in mortgages and loans to millions of households. On the other hand, if China’s economic activity, which is currently slow, begins to grow, we will see an increase in demand for gas in the form of LNG, and then the price of gas in Europe will increase, thus creating more instability.
The price of English energy bills remains high.
British Gas Company announced that since the wholesale price of gas in the market is more than two times the average level, the cost of household energy bills is likely to remain high in the future. According to the executive director of Centrica, the parent company of energy suppliers in the UK, after Russia attacked Ukraine, the UK is still facing risks in the field of gas supply.
Energy prices are two and a half times the long-term average.
Chris O’Shea told BBC Radio 4’s Today programme: “I think what we’ve got to remember is the energy prices had more than doubled before Russia invaded Ukraine.” Now, prices have returned to pre-war levels but are still two and a half times the long-term average. According to this report, it is true that with the reduction of the price ceiling by the British energy watchdog, the price of energy bills will decrease by 27 million British pounds, but despite this price ceiling, each unit of gas and electricity is still 800 pounds higher than the figure before the war between Russia and Ukraine. And it is predicted to remain high until the end of winter.
Warning about the energy challenge in winter
In a letter to the Prime Minister, more than 140 charities in the UK warned about the challenge of millions of vulnerable households to meet the unbridled costs of electricity and gas this winter. Many experts believe that, along with Kyiv, Europe has been the big loser of the Ukraine war and that this continent has suffered the most economic, political and security damage from the current war with Russia. The predicted surge in electricity rates will increase the energy costs of English households again.
Consequences of the Ukrainian War for Europeans
European countries are contending with various economic and political consequences arising from the conflict in Ukraine. These encompass an energy crisis, surging inflation rates at levels unseen in decades, an economic recession, substantial job cuts, a multitude of corporate bankruptcies, the resurgence of far-right political movements, increased dependence on the United States for security, and a continuous wave of strikes and protests. These trials constitute merely a portion of the profound effects that European nations confront daily due to the ongoing conflict in Ukraine.
140 charity letter to Rishi Sunak
The lack of a correct approach to increasing the price of energy has a long-term impact on consumer budgets. In this regard, in addition to 140 charities and human rights institutions, in a letter, parts of which have been published in the British media, they requested Prime Minister Rishi Sunak to provide financial support to the people and reduce the pressure caused by the skyrocketing energy bills in this country. According to reports, the price of electricity and gas consumption in the UK will increase by 13% compared to the winter of last year.
British inability to pay energy bills
This price surge has reached record-breaking levels compared to last year, marking the highest point in the history of the UK. Charitable organisations have warned that without government intervention, up to a third of the British population may find it impossible to cover their electricity and gas bills this year. The letter urges the London government to support the most vulnerable households teetering on the edge of fuel poverty as the cold season looms.
The long-term challenge of fuel poverty in the UK
Last year, the Liz Truss government planned to keep prices in the range of 2,500 pounds for two years by paying subsidies to energy companies. She also considered another 400 pounds as a subsidy for people to reach the ceiling of electricity and gas bills 2,100. But the implementation of this expensive plan, along with his other economic reforms, led to chaos and financial shock in the country and, finally, the government’s fall.
Replacing a bad customer’s electricity meter
Rishi Sunak’s government immediately cancelled the economic programs of the Truss government and reduced the energy cost reduction scheme from two years to six months in April. Meanwhile, according to statistics, millions of people have faced the fuel challenge, and the electricity and gas meters of bad customers have been cut off. The Times wrote in a controversial report that British Gas, the largest energy distribution company in England, hired a private company called Arvato Financial Solutions to replace the meters of bad customers with rechargeable ones.
The absence of effective price control planning by the government under Rishi Sunak is leaving a lasting impact on consumers’ budgets. Research conducted by an English publication reveals that many of those subjected to compulsory meter replacements were individuals and families in financially precarious situations, including the elderly, sick, and vulnerable, who lacked the means to cover their energy expenses. According to the report, the National Energy Action charity has projected that this winter, as many as 6.3 million citizens will grapple with fuel poverty, which is a staggering increase of 2 million compared to the 2021 figures.
Bankruptcy of the UK energy market
The increase in prices has a long-term impact on consumer budgets. Reports show the British economy is in the worst state of the last half century due to several successive crises. The inflation rate has reached from 2 to 7 per cent, and the country has entered a period of economic recession. The interest rate, which is directly related to the monthly mortgage instalments of millions of English people, has increased by 525 basis points and has imposed a high cost on people’s expenses. The challenge of fuel poverty is a serious and long-term problem for the British, which requires sustainable planning instead of short-term solutions.