Thirty million people in the UK will be unable to afford what the public considers to be a decent standard of living by the time the current parliament ends in 2024, according to a study.
The New Economics Foundation, a left-leaning thinktank, said rising prices, below-inflation increases in earnings and projected increases in unemployment would result in 43% of households lacking the resources to put food on the table, buy new clothes or treat themselves and their families – a 12 percentage point rise compared with 2019.
The NEF said its calculation that by 2024 almost 90% of single parents and 50% of workers with children would fall below a minimum income standard showed the need for a radical overhaul of the welfare system.
PRE-PAYMENT meters are forcing people to live in cold and damp homes, more than half of whom have poor health or disabilities, research by campaigners revealed today.
Some 64 per cent of customers on pre-payment meters are vulnerable, even before the predicted cold snap kicks in and increases energy bills, with 51 per cent having health conditions or disabilities, according to the figures collected by YouGov for the Warm This Winter campaign.
More than 10 per cent of customers on those meters have effectively self-disconnected by massively reducing their energy use.
More than 30 per cent of such customers now live in cold damp homes, more than the national average of 19 per cent.
Among the people on pre-payment meters and classified as vulnerable, 14 per cent are disconnecting and 36 per cent now living in a cold, damp home.
Publication of the research coincides with recent reports revealing that energy firms have secured almost 500,000 court warrants to instal pre-payment meters in the homes of customers in debt since the end of the coronavirus lockdown.
Enough is Enough is a mass movement resisting the cost of living crisis. It was launched earlier this year, and has grown rapidly. Over 500,000 people signed up to the campaign by the end of August and the group has held packed out rallies in cities across the country. On October 1, Enough is Enough held protests and actions in solidarity with striking workers in 50 towns and cities.
Enough is Enough has a set of five demands – delivering a real pay rise for workers, slashing energy bills, ending food poverty, ensuring decent homes for all, and taxing the rich. Recent polling from Survation found the group’s demands are popular with the public. Survation found 84 per cent support capping energy bills, 76 per cent support pay rising with inflation, and 72 per cent support increasing taxes on the rich.
Activists have taken part in a second day of protests to demand the Government end the cost-of-living and climate crisis by stopping new oil and gas.
The Just Stop Oil (JSO) group said that 250 of its supporters held marches through central London on Sunday where they disrupted traffic in shopping districts and tourist hubs before carrying out a sit-down protest on Waterloo Bridge.
A JSO spokesman said: “We will continue in civil resistance until this government takes immediate steps to meet our demand to end the cost-of-living and climate crisis by stopping new oil and gas.
Liz Truss has replaced Boris Johnson as prime minister of UK. The first obvious step intended to show the direction the new government intends was a budget presented by new Chancellor Kwasi Kwarteng on Friday. Kwarteng fired the Treasury's permanent secretary in the preperation of this budget.
There is a cost of living crisis in UK driven by runaway inflation and massive increases in energy bills. Despite this, Truss and Kwarteng's budget benefitted the already stinking rich. The top rate of income tax of 45% for the highest earners was abolished so that the highest rate is now 40%. Clearly that's going to benefit the rich and the very rich most.
Despite denials, this is trickle-down economics with the idea being that the economy will be stimulated by the highest earners and that benefits will trickle-down to all. There is a simple, logical argument against trickle-down economics. It is that the rich already have money that they can spend to stimulate the economy and they're not doing it, if they're already not spending their wealth, why should they now start?
There is also an alternative, logical argument that to stimulate the economy it's best to instead help the poor. The argument is that the poor are desperate and that any money they receive to alleviate their wreched situations will be spent and therefore stimulate the economy.
It appears that Liz Truss and her Chancellor Kwasi Kwarteng are pursuing outdated, discredited and abandoned economic theories which are the exact opposite to what is needed. Markets responded poorly to the budget.
Britain will be plunged into an even worse energy crisis in a year’s time without an immediate plan to improve leaky homes and dramatically reduce demand for gas, ministers have been warned.
The UK ranks among the worst in Europe for the energy efficiency of its homes, according to new research outlining an urgent need to reduce the amount of heat being wasted. Experts are warning that while Liz Truss has bought the government time with her £100bn-plus package to cap energy bills, similarly expensive and unsustainable schemes will be needed unless substantial plans are introduced to improve homes and reduce demand.
Experts believe a serious energy-efficiency programme could have a real impact within a year. The institute pointed to Germany as a success story, where grants, low-interest loans, tax rebates and free expert advice have all been used, resulting in high take-up figures.
The richest 1% of the world’s people (those earning more than $172,000 a year) produce 15% of the world’s carbon emissions: twice the combined impact of the poorest 50%. On average, they emit over 70 tonnes of carbon dioxide per person every year, 30 times more than we can each afford to release if we’re not to exceed 1.5C of global heating. While the emissions of the world’s middle classes are expected to fall sharply over the next decade, thanks to the general decarbonisation of our economies, the amount produced by the richest will scarcely decline at all: in other words, they’ll be responsible for an even greater share of total CO2. Becoming good global citizens would mean cutting their carbon consumption by an average of 97%.
There’s an oft-quoted axiom, whose authorship is obscure: it is easier to imagine the end of the world than the end of capitalism. Part of the reason is that capitalism itself is difficult to imagine. Most people struggle to define it, and its champions have generally succeeded in disguising its true nature. So let’s begin by imagining something that’s easier to comprehend: the end of concentrated wealth. Our survival depends on it.
I’ve come to believe that the most important of all environmental measures are wealth taxes. Preventing systemic environmental collapse means driving extreme wealth to extinction. It is not humanity as a whole that the planet cannot afford. It’s the ultra-rich.
Something to watch on the eve of huge energy price increases driving the cost of living crisis in UK
Yet public ownership is opposed passionately by the Conservative government, while the leader of the opposition has said he is “not in favour” of it – despite his election on a platform that committed to “bring rail, mail, water and energy into public ownership to end the great privatisation rip-off and save you money on your fares and bills”.
Public ownership is on the media’s radar, too. When Labour leader Keir Starmer announced his policy to freeze bills this week, he was asked why he wouldn’t also nationalise energy, replying that: “In a national emergency where people are struggling to pay their bills … the right choice is for every single penny to go to reducing those bills.”
But so long as energy remains privatised, every single penny won’t. Billions of pennies will keep going to shareholders instead.
The energy market was fractured under the mass privatisations of the Thatcher governments in the 1980s. It contains three sectors: producers or suppliers (those that produce energy), retailers (those that sell you energy), and distribution or transmission (the infrastructure that transports energy to your home).
It is important to bear this in mind when we’re talking about taking energy into public ownership. We need to be clear about what we want in public ownership and why.
By 2019, Labour had a detailed plan on how to do this – worked up by the teams around then shadow business and energy secretary Rebecca Long Bailey and then shadow chancellor John McDonnell. The plan is not the only way, but it illustrates what exists and how one could go about re-establishing a public energy ecosystem, run for people not profit.
The recent TUC report shows the cost of nationalising the ‘Big 5’ energy retailers – British Gas, E.ON, EDF, Scottish Power and Ovo – to be £2.8bn, which would go on buying all the companies’ shares. That’s a lot of money, equivalent to more than the annual budget of the Sure Start programme in 2009/10 (its peak year). But it’s a one-off cost, not an annual one.
And it’s not like the current privatised system doesn’t have its costs: since June 2021, the UK government has spent £2.7bn bailing out 28 energy companies that collapsed because they put short-term profits ahead of long-term stability – companies like Bulb Energy. We have spent billions of pounds already to get nothing in return. So £2.8bn is not a large amount of money to pay to gain these assets, rather than just bailing them out.
The big energy retail companies made £23bn in dividends between 2010 and 2020 according to Common Wealth, and £43bn if you include share buy-backs. What you choose to do with that surplus in public ownership is another matter: you could use it to invest in new clean energy or to lower bills or fund staff pay rises, rather than subject your workers to fire-and-rehire practices as British Gas did last year.
Labour’s previous plan also involved taking the distribution networks – the National Grid – into public ownership. This would end the profiteering at this level, too – with £13bn paid out in dividends over the five years prior to 2019. As Long Bailey said at the time, we need “public driven and coordinated action, without which we simply will not be able to tackle climate change”. Like previous nationalisations, the purchase of the grid and distribution networks could be achieved by swapping shares for government bonds. By international accounting standards, the cost is fiscally neutral as the state gains a revenue-generating asset, which more than pays for the bond yield.
The final part of the plan – and the most complicated – is production and supply. It would be impossible to nationalise the oilfields of Saudi Arabia or Qatar – and for good reasons we should want to leave fossil fuels in the ground, anyway, rather than contest their ownership.
And so what Labour proposed in 2019 was a mass investment in new renewable energy generation projects, with the public sector taking a stake and returning profits to the public. For example, under the ‘People’s Power Plan’, we proposed 37 new offshore wind farms with a 51% public stake, delivering 52GW alone by 2030, equivalent to 38 coal power stations. There were additional proposals for onshore wind, solar, and tidal schemes, as part of a 10-year £250bn Green Transformation Fund, which included other schemes like the Warm Homes insulation initiative.
Labour’s new shadow chancellor Rachel Reeves has promised a similar level of investment – a £28bn a year climate investment pledge.
Any surplus energy would then be sold on international markets, with a People’s Power Fund – a sort of sovereign wealth fund – to deliver public investment in local communities’ social infrastructure: a genuine levelling-up fund, perhaps.
Many people will say this can’t be done, but of course it has been before. The 1945 Attlee government nationalised energy and successive Conservative governments – including those of Churchill, MacMillan and Heath – were happy to have a nationalised asset. Harold MacMillan famously accused Margaret Thatcher of “selling off the family silver” when she privatised state industries.
When I was born in 1979, the National Coal Board, British Gas and British Petroleum were all publicly-owned or majority publicly-owned companies. Between them, they were the major suppliers of our energy. Our gas bills came from British Gas and our electricity bills from our regional electricity board (in my case Seeboard, the South Eastern Electricity Board), and coal and oil fuelled our power stations.
The regional electricity boards had been brought into being by the Attlee government’s Electricity Act 1947, when electricity companies were forcibly merged into regional area boards and nationalised. The Coal Industry Nationalisation Act 1946 and the Gas Act 1948 had together brought energy into public ownership.
Seeboard was privatised in 1990, and later became part of EDF Energy – ironically, the nationalised French energy company, whose profits from the UK’s stupidity are used to subsidise French consumers.
The French government has now fully nationalised EDF (previously it was 84% publicly owned), and household energy bills rose by just 4% this year – compared to over 50% in the UK and a forecast 200% by January 2023.
If Starmer doesn’t want to listen to me (or his own commitments from 2020), perhaps emulating the centrist Emmanuel Macron in this instance would be palatable?
From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources
In his later years, Robin Cook argued: “The market is incapable of respecting a common resource such as the environment, which provides no price signal to express the cost of its erosion nor to warn of the long-term dangers of its destruction.”
From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources. The market has also failed to decarbonise at pace, or to end the scourge of fuel poverty.
On the media this week, shadow energy secretary Ed Miliband said Labour is “continuing to look at what the right long-term solution is for our energy system”. It is up to all of us to campaign for that solution to be public ownership – whether that’s from within the Labour Party (like me) or from the outside.
Last week the UK energy regulator, Ofgem, announced that the energy price cap will rise by 54% in April, pushing up bills for millions of households by £693 per year. On the same day, fossil fuel company Shell reported that its annual profits had quadrupled, largely due to the very same soaring gas prices that are responsible for fuelling recent spikes in inflation.
In other words: not everyone is feeling the pinch of the ‘cost of living’ crisis. As household budgets are squeezed even further, fossil fuel company shareholders are laughing all the way to the bank.
Energy is far from the only sector where one person’s pain is another’s gain. In recent decades, many of our most essential services have become engines of extractive redistribution – taking wealth away from workers and funnelling it upwards to asset owners.
Perhaps the largest expense for many households is housing costs. For much of the past half-century, housing has served two conflicting functions in the economy. On the one hand, housing is a basic need – providing shelter, security and warmth. From this perspective, it is desirable for house prices and rents to stay low to ensure that housing is affordable. On the other hand, housing has become one of the primary vehicles for accumulating wealth. From this perspective, it is desirable for house prices and rents to increase, enabling those who own property to grow their wealth over time. These two roles are in direct conflict with each other: housing can not simultaneously be affordable and lucrative as an investment at the same time, as much as politicians like to pretend otherwise. In recent decades, government policy has sought to promote the latter role at the direct expense of the former – with dire consequences for the millions of households that are locked out of homeownership.
While economists and politicians hail a booming housing market as a sign of wealth creation, in reality it’s one of the most powerful forms of wealth redistribution. When the price of a house goes up, the total productive capacity of the economy is unchanged, because nothing new has been produced: it merely constitutes an increase in the value of an existing asset. While this increases the net wealth of individual homeowners and landlords, for everyone else it often means facing higher rents in the rental market, and having to save for a deposit and pay more interest on larger mortgages. The reality is that the housing ladder is rather like a zero-sum game: the wealth enjoyed by some is mirrored by the deprivation and exclusion of others.
There can be no doubt that the ‘cost of living crisis’ is a real concern. But it is not new, and it is not simply the result of rising gas prices. For decades, British households have been squeezed by a pincer movement of persistently low incomes on the one hand, and extractive business models on the other. Unless urgent action is taken on both fronts, another ‘lost decade’ looks all but inevitable.