LONDON, Apr 2 (US): Tia Rutherford is worried about her 3-year-old son.
With energy prices soaring last fall, she put wool blankets over her doors and windows to keep the cold out and began serving Jacob’s breakfast in his room so she wouldn’t have to heat the living room. The Associated Press (AP) has reported that she is concerned that she cannot pay utility bills and that her son is not warm enough.
“There are implications for his health,” said Rutherford, a 29-year-old single mother who lives in southeast London. “He gets colds all the time.”
People across the UK will face similar choices in the coming months with energy costs for millions of households rising 54% on Friday. This is the second big jump in energy bills since October, and there could be a third jump in the future as the rebound in demand from the COVID-19 pandemic and Russia’s now war in Ukraine has sent oil and natural gas prices soaring.
Energy costs are the main driver of rising consumer prices. While inflation is a global phenomenon, it is a bigger problem in Britain because it is more susceptible to higher natural gas prices than its gas-reliant European neighbours, where utility bills and other costs have also risen. Prices for natural gas, which is used for electricity and heating, have more than doubled in the past year.
In the UK, economists are warning of the biggest drop in living standards since the mid-1950s, driven by skyrocketing energy costs, food prices and previously planned tax increases. Household incomes available to spend, adjusted for inflation, are expected to decline 2.2% this year, according to the Office of Budget Responsibility.
These numbers obscure the impact on low-income people who have been disproportionately affected by the crisis. As they spend a greater proportion of their budgets on food and energy, the poorest quarter of British households will see their real income fall 6% this year, according to the Joseph Rowntree Foundation, a think tank focused on improving living standards.
People who depend on government benefits and state pensions are under added pressure because the annual cost-of-living adjustment was based on annual inflation figures until September — before consumer prices rose.
That means interest is set to rise just 3.1% this year. The Bank of England forecast inflation jumped to a 30-year high of 6.2% in February and is expected to peak at around 8% this year as the war has sent food and energy prices steadily higher.
As costs rise, people are moving their beds near the windows so they can read by street lamps outside, said outreach staff at Christians Against Poverty, which advises those in debt. Divorced parents skip meals so they can buy food for their children when they visit, and more and more people are reporting stress that makes them contemplate suicide.
“The cost of living crisis is really costing lives,” said Gareth McNab, the charity’s director of foreign affairs. Almost every call to our new inquiry team indicates the energy crisis and its inability to meet it. And yes, the situation is desperate there.”
Energy prices for 22 million households will rise on Friday as the national price cap update begins. The regulators adjust it every six months. Analysts expect the third consecutive jump to the maximum later this year, which could leave consumers with utility bills more than double what they were a year ago.
Britain relies more on natural gas for its energy needs than the European Union, where it has less nuclear and renewable energy. Britain has also been slower than its neighbors to isolate and seal off the country’s aging housing, so it requires more energy to warm it.
Britain’s largest gas storage facility was also allowed to shut down five years ago, leaving the country with the ability to store just 12 days of supplies, compared to about 80 days in Germany, which also relies heavily on natural gas. This means that Britain in times of crisis has become more dependent on buying gas through “spot markets” that reflect short-term price fluctuations.
“In normal times, we use more energy than (Europeans) to heat their homes, but … the price is low enough that you don’t notice a big difference in the cost of living,” said Aaron Advani, an inequality expert at the University of Warwick. “Now that energy prices are up, they pay more, but we pay a lot more. That difference is magnified.”
However, some European governments acted more aggressively than Britain in an attempt to reduce costs. France has forced a state-controlled utility to limit its electricity price hike to 4% this year. Spain has imposed a tax on windfall profits for energy producers which will be passed on to consumers.
Britain responded in February with a 9 billion pound ($11.8 billion) package designed to help offset rising public utility bills. Treasury Secretary Rishi Sunak announced further measures last week, including a tax cut on motor fuels. But he has shrugged off calls for a tax on producers’ windfall profits or to delay a planned 1.5 percentage point increase in income taxes, also due in April.
Sunak said the government should keep spending under control amid the uncertainty caused by the war in Ukraine and after the debt soared last year to the highest level since 1963.
Lawmakers from all parties criticized Sunak for missing the point, suggesting that he failed to understand the scale of the problem for low-income people. But he does not back down.
Meanwhile, people who have little try to live on less. Chris Price, who runs a community charity called Pecan in south London, says food bank customers are giving up potatoes and other root vegetables because they need to be cooked.
“People say, ‘I need food that I can cook easily and inexpensively because if I put something in the oven for too long, it’s going to use a lot of electricity or gas,'” he said. They are really not sure if they can afford it. ”
These are also the people hardest hit by the pandemic and recent cuts in government subsidies, said Adam Schurrer, chief executive of National Energy Action, a charity focused on fuel poverty.
“There is no downsizing. There are no smart decisions,” Hadaf said. “You just don’t heat your house, you don’t use your cooker, you don’t heat water, you don’t shower. You just don’t do these things because you can’t do these things. There are no options for many people.”
Rutherford is one of those who run out of options.
It gets energized by a prepaid meter, and it’s often the only option for people who are late in paying bills. Prepaid meters allow customers to control how much they spend, but they pay high prices and can be left without electricity if they run out of credit.
This has left her struggling to fill the counter, paying off debts she already owes to her power supplier and keeping her son warm when he comes home from daycare. I’ve tried to save by turning off the lights, and living in the dark except for strings of little white Christmas tree lights that use less electricity.
“I never had to live like this before,” she said. “I literally don’t have any money – and my electricity will go out.”
AOQ