The UK, one of the wealthiest countries in the world, is now facing a worrying cost of living crisis, leaving an increasing percentage of working families struggling to feed their children and heat their homes. October 2022 saw a rise in consumer prices of 11.1% from 12 months prior, signifying that households can no longer afford basic essentials such as food and energy. University students are additionally skipping meals, and 1 in 4 are considering dropping out due to the unsustainable cost of living away from home.
Why have energy prices surged in the last year?
Following the Russian invasion of Ukraine in February 2022, Putin has entered an energy war with Europe through a reduction in gas supplies on which they are heavily dependent. This may have had a drastic impact on all European households, but the UK experienced a 128.9% increase in gas prices in the 12 months preceding December 2022, and a 65.4% increase in electricity prices (an increase 30% higher than the most expensive EU country, Italy).
Even though Ofgem has been setting price caps since 2019 in order to protect consumer welfare, those price caps present themselves to be rather ironic if an average annual bill was capped at £1,277 in October 2021 but then rises to £4,279 in January 2023. This represents a 235% increase. Naturally enough, the government have introduced an Energy Price Guarantee limiting the average annual bill to £2,100. However, a 65% increase in energy bills remains simply delirious when real incomes in 2022 fell on average by £76 per month.
The new ‘Demand Flexibility Service’
The government have recently introduced a new energy-saving scheme which incentivises households and businesses to consume less electricity and gas during hours of peak demand in return for discounted bills. The experiment was conducted Monday (23rd January) between 5pm and 6pm, and Tuesday (24th January) between 4.30.pm and 6 pm, with over 1 million families and firms taking part each night.
The same level of energy can still be used daily, but must be rearranged so as to use no, or very little energy during the ‘saving session.’ Octopus Energy rewarded its 400,000 participants an average of £2.50 on Tuesday, reducing the demand at peak times by 60%. Unsurprisingly, many customers have also only saved as little as 41p, and thus believe that the new scheme is simply not worth rescheduling their evenings for.
It is an insult that working families, which rely on food banks and are already operating on a minimum level of heating, have now been asked to delay feeding their children and cut out their lights for an hour, all in return for £2.50. It is time that the UK government take responsibility for the rising cost of energy and perhaps renationalise energy suppliers in order to maintain control of prices. Once again, the Tories look to consumers for a change in behaviour rather than the profit-hungry distributors.
Image credit: “Freeze Prices – Not the Poor. (51981171207)” by Alisdare Hickson from Woolwich, United Kingdom is licensed under CC BY-SA 2.0.