BRITONS SINK DEEPER INTO DEBT AS ROCKETING ENERGY COSTS BEGIN TO BITE
By SHAMLAL PURI
Associate Publisher & Senior Editor – UK
Worth Noting:
- Furious Opposition Labour Party hit out at Centrica’s profits announcement, describing them as “theft from the British people.” They demanded that the energy company return every penny to the people immediately.
- Critics have lashed out, saying blaming Russia for the increase in energy costs is untrue as 75% of the UK’s energy is produced domestically, and the cost of that does not appear to have increased.
- They accused the Boris Johnson Government of giving these giants a free hand in profiteering. Not from increased energy costs, but its other activities, including upstream business, including North Sea Operations, helped boost its profits by over 1,100%.
- Close at heels is the oil giant Shell which reported bumper profits of £9.4 billion in the second quarter compared to £4.5 billion in the same period last year.
Winter 2022 will be harsh to the people of the United Kingdom and their wallets as runaway energy prices as high as some 400% dig in, causing severe hardships in what is being called a national scandal.
There are warnings that the uncontrolled energy costs could rise to 400%, leaving Britons gawping in horror. In the worst-case scenario, they face the nightmare of freezing homes, burst pipes, and even death from hypothermia.
Ofgem, the energy regulator, announced the energy price cap would increase by 80% from October, hiking the average gas and electricity bill from £1,971 to £3,549 a year. The era is described as Shocktober.
Some 12 million Britons are in despair as the country grapples with an unprecedented energy crisis.
A survey by the opposition Liberal Democrats party reveals that hit by skyrocketing energy prices, one in four Britons will not turn on their heating throughout this winter.
Christmas 2022 is bound to be very dark and grim for many households. Many would not turn on the traditional Festive lights and prefer their homes to be plunged into darkness.
Of a sample of 2,000 adults interviewed in this survey, 23% said they would switch off their heating over the bitterly chilly winter months.
Worse still, 27% of parents of children under 18 would also be forced to turn off their heating.
Some 70% said in the survey said they would drastically reduce the hours their homes will have heating.
This is particularly serious because parents with young children face severe health issues from damp homes.
Despite these heartbreaking situations, the Government is merely throwing crumbs of comfort to householders in the poverty trap.
It is giving them a few hundred pounds of allowances, previously £200, now increased up to £600. Bureaucratic errors can leave out eligible beneficiaries from the allowances net.
Critics say these are feeble attempts by the Government to help families and pensioners throughout the country and are a national scandal as they must choose between heating their homes or feeding their children.
Recent weeks have shown obscene profits amounting to billions of Pounds made by leading energy and petrol companies causing a political furore in the opposition parties and discomfort in the ruling Conservative Party.
The obscene part of all this is that neither of the Prime Minster candidates is scrapping energy prices rise.
The opposition believes a windfall tax on oil and gas companies will pay for a price cap freeze.
In May, then chancellor of the exchequer Rishi Sinak, now the Prime Ministerial candidate, introduced a 25% levy after a rise in wholesale prices following the Ukraine invasion and the Russian decision to curtail gas exports.
The UK’s energy consumers got a smack on their faces when British Gas and Shell revealed their obscene profits while the rest of the country was suffering.
British Gas’s parent company Centrica’s half-year profits to June increased five-fold to £1.34 billion as energy bills threatened to rocket amid fears that Russia could cut off Europe’s gas supplies. Profits for the same period to June last year were £262 million.
The media has accused energy giant’s chiefs of lining their pockets while the multitude struggles to pay their bills.
Furious Opposition Labour Party hit out at Centrica’s profits announcement, describing them as “theft from the British people.” They demanded that the energy company return every penny to the people immediately.
Critics have lashed out, saying blaming Russia for the increase in energy costs is untrue as 75% of the UK’s energy is produced domestically, and the cost of that does not appear to have increased.
They accused the Boris Johnson Government of giving these giants a free hand in profiteering. Not from increased energy costs, but its other activities, including upstream business, including North Sea Operations, helped boost its profits by over 1,100%.
Close at heels is the oil giant Shell which reported bumper profits of £9.4 billion in the second quarter compared to £4.5 billion in the same period last year.
Another company, oil giant BP Plc reported a profit for the quarter was $9.3 billion, compared with a loss of $20.4 billion for the first quarter of 2022.
The current excuse is the war between Ukraine and Russia. Previously, Covid-19 was blamed for shortages and price hikes. At that time, blame was laid on the reduction in factory outputs, delivery problems and staff shortages as workers were hit by Covid-19. Those were the days of severe shortages, panic-buying and empty shelves. Fights broke between shoppers for items such as toilet rolls which sold as high as £10 to £15 for a bundle of six instead of the regular £2.99 to £4.99. Chaos is also set to return to supermarket shelves.
British gas and electricity companies are rolling in money as they are set to rake in an extra £170 billion in the coming months.
Prime Minister contestant Liz Truss says that profit is not a dirty word in her dictionary when referring to the calls for a Windfall tax on energy firms.
The zombie Conservative Government of caretaker Prime Minister Boris Johnson looks impotent as the energy companies go laughing to the banks.
Households are warned that their energy bills this winter could shoot up to between £500 to £700 a month and even more if the temperatures plummet.
Those consumers with Prepay meters for their electricity and gas are set to be hit with £700 monthly.
Some 4 million people have pre-paid meters where they must pay the money before getting their constant power supplies. No money, no energy.
An annual energy bill of between £6,000 to £8,400 is just a tiny change for the affluent but a severe challenge for the lower and middle classes, whose average salaries range from £13,550 for part-timers to around £38,000 for those lucky to be in full-time jobs.
They have families to feed school-going children with their own needs, such as uniforms and school meals. They also have other overheads, fuel for the car or public transport fares, council taxes, not to mention personal needs such as visits to the pubs and socializing in restaurants.
The lower strata of society have also been hit below the belt, giving them a stark choice – if they should heat their homes in the bitter winter or eat.
Incidents are coming to light where the poor survive on soup only for their meals so they can save money to pay energy bills.
Studies have shown that at least a quarter of the British population will switch off their heating during the winter and suffer the vagaries of the bitter Arctic cold because they do not have the money to pay energy bills.
One of the cultural problems with the native British at all levels of affluence is that they do not have the habit of saving for a rainy day. They splash out all their earnings on their daily living, socializing, alcohol, cigarettes, and luxury local and foreign holidays and end up borrowing until the next payday. Struggling householders may be forced to turn to high-interest short-term lenders to make ends meet over the winter.
This way, they end up in the ugly debt trap as they service their borrowing with each month’s salary forcing them to sacrifice and cut corners on the family’s living standards.
Even pubs that form part of the British culture are groaning under the weight of the current crisis, which they described as even worse than the Covid-19 lockdowns when they were forced to shut down. They warn that thousands of pubs could be forced to shut because they cannot afford to pay for the crippling energy costs.
One British pub owner has been hit with an energy bill of £33,000 for the year. Stark warnings have been issued that the worst is yet to come later in the year.
Pub owners have demanded that the Government intervenes to stop these unacceptable rises.
The way things are now, pubs will be forced to sell a pint at a whopping £14 instead of the average £3.95 in London pubs. This would drive patrons to buy their drinks from supermarkets and drink at home or abstain from drinking.
People are already cutting costs by slashing their club and gym memberships, reducing car usage, and going to work on public transport.
At home, they ensure that lights in unused rooms are turned off, and plugs from appliances are switched off and pulled out from the sockets as electricity flows, even when the plugs are switched off.
There are even doubts if ordinary homes will bother to decorate with lights at Christmas and New Year.
Despite the writing on the wall and constant warnings, Liz Truss, widely believed to be the next Prime Minister, remains unmoved and continues to downplay the cost of living and the energy crisis.
She doesn’t think there is any cause for alarm and lashes out at what she describes as “portents of doom.” She disagrees with what she describes as “declinist talk.”
She believes Britain is headed for better opportunities.
Going by her ongoing negative thinking, even the Bank of England’s grim statistics and warnings are the cautions of a doom forecaster.
Even the ruling Tory Party members believing she would be the next Prime Minister, have urged Liz Truss to move fast to resolve the cost-of-living and energy crisis as soon as she takes office.
Britons will have to bite the bullet and take the pain of the current crisis – this winter or the following winter – before a resolution is found.
If outgoing Prime Minister Boris Johnson’s political speak is to be accepted at face value – 2023 will be a better year for Britain with his successor working on new solutions. The poser is why he has failed to stem the rot.
It is improbable that the new Prime Minister – either Rishi Sunak or Liz Truss would have a magic wand to resolve the crisis at the press of a button.
Doomsday critics predict it will get worse before it gets better.