Hard Done By

(Photo by Bonnie D. Huval, copyright 2022)

On his way into the orchard, the man said he wanted to check how the plums are coming along. “Just doing a little scrumping.” He only took one or two plums. I was picking blackberries from the hedge along the side of the road.

The orchard is on a private farm. Sometimes we walk our dogs on the public footpath through it. The farm is its owner’s livelihood, so we enjoy getting to walk through it but don’t take anything. Out here in the countryside, we can forage from the side of the hedgerow that fronts on public roads. In the back of my mind I’ve understood a few people do a bit of scrumping, although this is the first time I’ve witnessed it.

This year there will be more foraging, scrumping and gleaning than usual. Too many people are already hungry and some of the food banks don’t have enough food to meet the need any more.

A month ago, number crunchers said inflation will go to 9.x% by the end of this year. Then 10.x%. Then 13.x%. Citigroup now says by early next year, UK inflation will be 18.6%.

We all know about the inflationary price pressures of supply chain shortages and exacerbating effects of Russia’s invasion of Ukraine. But the magnitude of the rise in energy prices doesn’t make sense. It’s bad in much of the world, yes. Why is it so much worse in the UK?

Energy and food are at the heart of this, especially energy which affects everything else. We buy the value range of most foods. We’ve seen some items rise to 50% more than a year ago. Most are not up so badly, maybe 15% or 20% or so. But our fixed rate for energy is more than twice what it was last year, and the next best offer was more than triple.

The energy regulator sets a price cap on the unit price that can be charged to consumers on default tariffs. (Businesses get no such break. Some of them are already paying six times as much for energy as a year ago.) Figures published in the news for annual energy cost apply the price cap to average household energy consumption. At the start of the year, that came to £1278. In April it jumped to £1971. This morning a new figure was announced, £3549 as of 1 October. Citigroup calculates it will hit about £4500 in January and £5800 in April. The consultancy Auxilione says it could be worse, exceeding £6000 by April.

How can the cost of energy for a typical home go up so fast? Why do people on renewable energy tariffs pay as much as people on standard tariffs? Why has the standing charge (which we pay every day even if we use no energy) gone through the roof? Shouldn’t the standing charge be about infrastructure costs and not about supply costs? (The usual answer about the standing charge is that it’s where companies add on the costs of taking in customers from suppliers that shut down. About 30 energy suppliers have collapsed so far.)

Experts say by January 45 million of the 68.6 million people in the UK will be in fuel poverty, defined as spending more than 10% of income on energy bills.

As the winter crunch hits, many more people will be unable to pay their entire utility bill and small suppliers won’t be able to cope. The industry warns that this will hurt all the energy suppliers and more of the smaller companies will fail.

At the same time, large energy companies are reporting record-breaking windfall profits.

Twice this week on BBC Radio 4 I’ve heard people in the industry say much of this is due to the way the regulatory agency calculates the price cap. They say the price caps for both gas and electricity are based on the price of natural gas, which has gone from 38 pence per therm in 2021 to 537 (so far).

So… we have runaway energy prices for energy users, windfall profits for large energy suppliers, a warped pricing structure, and ripple effects everywhere that are going so far, they’re causing hunger.

What does the energy industry want done about it?

Their latest recommendation is for the government to fill the financial gap to the energy companies in the short term and pass the cost of that subsidy to taxpayers over the next decade or so. Remember, the legal duty of their boards of directors is to maximize benefit for shareholders, within the bounds of laws and regulations on the industry. That means their boards are obligated to maximize profits and pass them along to shareholders in dividend payments, not narrow the profit margin or use this year’s windfall to ease the pain this coming winter.

The proposal would keep the energy companies nicely paid all the way through, and the people (consumers, taxpayers) would still get the bill.

Living here, I can attest that Brits are capable of putting up with an astounding amount of whatever is inflicted on them from the Powers That Be, but everyone has a limit. Even Brits. Too many people have been too hard done by. Scrumping can bring in a little food, but what about heat and light?

So far public anger is coming through in an increasing array of industrial strikes. Rail and transport workers have been prominent at the leading edge. Health care workers are reluctantly coming to the conclusion that they must strike also. Today it’s Royal Mail. The government already criminalized most peaceful protest and is now pushing back by threatening to make strikes illegal in at least some industries. People are using civil and civilized ways of saying what they find intolerable. Block that, and the alternatives are worse. I don’t know exactly when or how this will explode, but we are on course for the societal equivalent of a volcanic eruption.

I’ve suggested to friends with small businesses that they should check their business interruption insurance. I should probably add that the ones with physical premises should check their coverage in case of damage during a riot. And if I worked for an energy company right now, I think I wouldn’t admit it.