At the end of next week, Government regulator for electricity and gas markets Ofgem, will announce a new price cap for consumers effective from 1 October. This follows the previous price cap increase on 1 April.
The April increase has placed huge pressure on household budgets at a time when Brexit-related issues and supply problems due to the awful events in Ukraine are pushing the cost-of-living upwards.
With many energy customers paying double what they were this time last year, and an eye-watering increase in the price cap expected to be announced, many people are looking at the huge profits being posted by the energy companies and asking just what is going on.
For example, British Gas operator Centrica's adjusted operating profit for the first six months of 2022 rose to £1.34 billion, up from £262 million a year earlier. I’m not saying profit is a dirty word – every business needs to turn a profit in order to pay its workers a wage and to have money to invest going forward – but at a time when I am already receiving e-mails from people who are desperately worried about how they are going to cope, some of whom have already pared their energy use back to the bare minimum – profiteering of this magnitude is simply unacceptable.
Privatisation of what were publicly-owned energy companies was supposed to be good for competition. Instead, people are worrying about whether they can turn their cooker on - and you may as well not waste your time looking for better deals among those energy companies which haven’t gone bust and cost the taxpayer money.
Consumer champion Martin Lewis of the Money Saving Expert website, a highly-respected figure, has described the current situation as “a national crisis” and it’s difficult not to disagree with his assessment.
Mr Lewis has been vocal in calling for more support from the UK Government for energy customers – and let’s not forget those who are ‘off-grid’ and use other fuel sources – and has said if the Chancellor is to be consistent, he will need to double the amounts announced in the previous support package.
The major obstacle to people getting the reassurance they need and the detail of what form future assistance may take is the ongoing contest for the leadership of the Conservative Party. The candidates and the current Prime Minister have all indicated that this will need to wait until the new PM is in place later next month.
We’re told no major fiscal decisions should be taken by a Prime Minister with only a few weeks left in office. It has not gone unnoticed by me that this same UK Government managed to announce only last week that it was considering further reliefs for “energy-intensive businesses” including the option to increase the level of exemption for certain environmental and policy costs from 85% of costs up to 100%.
I’m certainly not against providing appropriate support for jobs and vital industries. But the question does have to be asked: if the UK Government can contemplate such a scheme for businesses, why do hard-pressed households the length and breadth of the country have to wait until the Conservative leadership contest is over before we get any decisions that will help people?
Not only is the UK’s energy system broken, it seems the entire Westminster system has ground to a halt and is unable to even think about what it might do to fix it.