Our energy system is broken. We need to rethink it.
At the centre of the cost of living scandal is the soaring price of household energy. It is time for a new approach to make sure everyone gets enough to meet their basic needs – not just today but in the future too.
The price of energy is rising dramatically thanks to a surge in demand as Covid-19 restrictions are lifted, plus sanctions on Russian oil and gas exports. This is driving inflation across the board and ratcheting up the squeeze in living standards.
Increases in the costs of energy, fuel and food are pushing millions of people into poverty. A recent briefing by the Joseph Rowntree Foundation shone a light on the extent to which low-income households are struggling. It found that 7 million households (the equivalent of the entire population of the North of England) are having to go without essentials including food, heating and basic toiletries, because they simply can’t afford them. And it will only get worse. Inflation is set to continue to rise this year and the energy price cap will once again go up in October – increasing the cost of energy bills for a typical household to nearly £3,000 a year.
The price spike causing this hardship for millions of families has also led to companies like BP collecting colossal windfall profits. So energy companies are making billions of pounds while ordinary people can no longer make ends meet.
The government is giving out cash to help people pay their bills: a £400 universal payment to every household and an additional means-tested boost of £650 for low-income households. But these are short-term fixes that leave vulnerable people at the mercy of government whims. They also do absolutely nothing to address the systemic failings in the energy system.
At the Social Guarantee, we believe that everyone should have access to life’s essentials. That includes providing energy security for all today, while building a sustainable energy system that can meet the needs of future generations without wrecking the planet.
How can we do this? The Energy for All campaign by the group Fuel Poverty Action points the way. They propose giving everyone free access to enough energy to meet their basic needs and charging on a sliding scale for what’s used above that amount. So everyone gets what is necessary to cook food, keep warm and light their homes without having to worry.
Using energy audits to take into account factors such as age, disabilities and household size, it is possible to adjust individual allocations so that everyone has what they need to cover the basics. Those using the most energy (typically the highest earners) would pay for excess energy use, rather than placing the burden of high energy costs on those who can least afford to pay.
Alongside clear social gains, this approach also brings significant environmental benefits. It will encourage people to stay within their free entitlement, thereby helping to reduce energy use at a time of climate emergency. It will help to end our dependency on volatile global markets in fossil fuels by encouraging government to invest in cheap renewable energy at home. And to
keep costs down it will also encourage public investment in the mass insulation of homes that is so desperately needed to make energy savings, cut harmful emissions and improve living standards.
Energy is essential for all of us. It cannot be left in the hands of oil and gas companies making eye-watering profits. We need a Social Guarantee that everyone’s basic energy needs will be met, now and in the future.