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Thursday, December 08, 2022

High energy costs are hitting the UK. it’s going to get worse

LONDON ( Associated Press) – Tia Rutherford is worried about her 3-year-old son.

As energy prices rise Last time, she draped wool blankets over their doors and windows to keep out the cold and began serving Jacob breakfast in his room so that he wouldn’t have to heat the living room. But she’s consumed by the worry that she can’t pay her utility bills and that her son isn’t hot enough.

“Her health is taking a toll,” said Rutherford, a 29-year-old single mom who lives in southeast London. “He’s constantly catching a cold.”

People in the United Kingdom will face similar choices in the coming months as the cost of energy for millions of homes is set to rise 54% on Friday. This is the second big jump in energy bills since October, and a third may be ahead as demand rebounds from the COVID-19 pandemic and now Russia’s war in Ukraine Increase in oil and natural gas prices.

Energy costs are the main driver of rising consumer prices., While inflation is a worldwide phenomenon, it is a bigger issue in the UK as it is exposed to rising natural gas prices. Compared to its gas-dependent European neighbours, where utility bills and other costs have also increased. The prices of natural gas, used for electricity and heating, have more than doubled in the past year.

In the UK, economists warned of the biggest drop in living standards since the mid-1950s, caused by a sharp drop in energy costs., increase in food prices and pre-planned tax. According to the Office for Budget Responsibility, disposable household income, adjusted for inflation, is expected to fall an average of 2.2% this year.

Those figures obscure the impact on low-income people disproportionately affected by the crisis. because they spend a large percentage of their budget on food and energyThe poorest section of British households will see their real income fall by 6% this year, according to the Joseph Rowntree Foundation, a think tank focused on improving living standards.

Those who rely on government benefits and state pensions are being doubly squeezed because their annual cost adjustments were based on annual inflation figures until September – before the rise in consumer prices.

This means profit is expected to increase by only 3.1% this year. But inflation hit a 30-year high of 6.2%. It is expected to peak in February and this year at around 8% as the war sends food and energy prices higher, the Bank of England predicted.

As costs rise, people are moving their beds to windows so they can read by the light of streetlamps outside, said outreach workers at Christian Against Poverty, which provides counseling for people in debt. Divorced fathers give up food so they can buy food when their children arrive, and a growing number of people report that the pressure makes them contemplate suicide.

“The crisis of cost of living is really the cost of living,” said Gareth McNab, the charity’s director of external affairs. “Nearly every single call to our new inquiry team mentions an energy crisis and an inability to cope. And yes, it is desperate out there.”

Energy prices for 22 million homes will rise on Friday as an update to the national price range. Regulators adjust it every six months. Analysts expect a third consecutive jump later this year, which could leave consumers with utility bills that are more than double what they were a year ago.

The UK relies more on natural gas to meet its energy needs than the EU countries with less nuclear and renewable energy, Britain has also been slower to insulate and seal the country’s older housing stock than its neighbours, so it takes more energy to heat them.

Britain’s largest gas storage The facility was also allowed to close five years earlier, leaving the country with the capacity to store only 12 days’ supply of supplies, compared to about 80 days in Germany, which is also heavily reliant on natural gas. Is. This means that in a crisis, the UK is more dependent on buying gas through “spot markets”, which reflect short-term price volatility.

“In normal times, we (Europeans) are using more energy than we can to heat our homes, but … inequality specialist at the University of Warwick,” said Arun Advani. “Now that energy prices are rising, they are more We are paying, but we are paying too much. And that’s because the gap has widened. ,

Still, some European governments have acted more aggressively than Britain in trying to limit costs. France this year forced a state-controlled utility to limit electricity price hikes to 4%. Spain imposed a tax on windfall profits from energy producers that would be passed on to consumers.

Britain responded in February with a £9 billion ($11.8 billion) package designed to help offset rising utility bills. Treasury chief Rishi Sunak announced more measures last weekIncluding tax deduction on vehicle fuel. But he ignored calls to tax producers’ windfall gains or delay a planned 1.5 per cent increase in income tax, which is also set for April.

Sunak said the government had to keep spending under control amid the uncertainty caused by the war in Ukraine and last year after the public debt rose to the highest level since 1963.

Lawmakers from all parties criticized Sunak for missing this point, suggesting that he failed to understand the scale of the problem for low-income people. But he is not holding back.

Meanwhile, those who have less are trying to live on less. Chris Price, who runs a community charity called Pecans in south London, says customers at the food bank are giving away potatoes and other root vegetables as they need to be cooked.

“People are saying, ‘I want food that I can cook easily and cheaply because if I put something in the oven for too long, it takes a lot of electricity or gas,'” he said. “And they’re really unsure if they can afford it.”

Adam Schorer, chief executive of National Energy Action, a charity focused on fuel poverty, said these people are most affected by the pandemic and recent cuts in government benefits, leaving them with little to back in the new crisis.

“There’s no deduction. There’s no smart decision,” Schorer said. “You just don’t heat your house, and you don’t use your cooker, and you don’t heat the water, and you don’t shower. We do. You don’t do those things just because you can’t afford to do those things. Not an option for many people.”

Rutherford is one of the people running out of options.

She gets her energy through prepaid meters, which are often the only option for those who are behind on 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 him struggling to top up the meter, pay off debts he already owes his energy supplier and keep his son warm when he comes home from day care. She has tried to save herself by turning off the lights, living in the dark, leaving behind strings of little white Christmas tree lights that use less electricity.

“I didn’t have to live like this before,” she said. “I literally have no money – and my power is about to be cut.”

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