A bait and switch, and we're picking up the bill again

It's been almost six months since the government announced the Energy Bills Support Scheme. Previously they had offered an insulting £200 loan to cover the expected increase in energy bills, and this scheme raised it to a still-insulting £400 which wouldn't have to be repaid. This would be spread over six months, a mere £66 each month. Now it's clear that even this joke solution is just another scheme to force us to keep paying our unaffordable bills.

Wednesday 31 August 2022

When the scheme was announced in April, the energy cap had just been increased to £1,971 - up nearly £700 on what it had been previously. Spread over six months we could clearly see that the EBSS wasn't a meaningful fix, but just a way of putting off having to reckon with the true causes of a growing energy crisis - as if paying even more when the support ran out was going to be possible for millions of people, many of whom were already in fuel poverty even before the cap was increased.

It was clear to anyone who was paying attention that we were sleepwalking into a national crisis. 

Since then, the outlook has become even worse. Now some analysts are forecasting that energy bills could be over £5,000 a year by April 2023, leaving more than three-quarters of households in fuel poverty. The government has been paralysed ever since by internal crises and a leadership squabble, and their plan hasn't been updated at all. Their best offer is no longer just insulting, but obviously inadequate.

Over the past few months we've also heard more about the corporate profits that underlie the bills crisis. Britain is the European country with the least dependence on Russian gas - less than 4% of its supply. But while bills have risen across Europe, only Britain is preparing to pay (or not pay) bills that are four or five times what they were a year ago. Other countries with less energy independence than Britain has seen smaller increases.

So we can't simply blame the war, but rather should keep our attention on the obscene profits being made by energy companies like Shell and Centrica. These companies' profits have rocketed even as the wholesale price of oil has shrunk to its lowest level in recent months, due to the margin they make for refining oil and making it into different fuel products. While they get richer, we get poorer. 

As if it wasn't bad enough, it's now becoming clear how the energy companies plan to profit as much as possible from the Energy Bills Support Scheme.

It was always a worry that the government's scheme involved giving stacks of the taxpayers' money directly to energy companies. Of course, we couldn't expect them to put more money in people's pockets, or work out fairer and more sensible ways to fix our energy system. But most people assumed that the monthly payments would be in the form of a discount or credit on our accounts, keeping our monthly bills down at least a little bit, for a little while - simple, right?

It turns out that the energy suppliers had other plans. Recently, customers of British Gas received an email revealing that the "support" would come not in the form of a credit or discount, but as a rebate. The email informed them that they would have to pay - in full - and then receive a refund "a few days later". It was an obvious attempt to instil fear in the hundreds of thousands of people contemplating cancelling their direct debits, and a way to withhold the rebate from the millions of households that can't afford to pay.

They can only do this because the government inserted a convenient loophole in their EBSS rules. "A domestic electricity supplier shall not be required to provide an EBSS in respect of an eligible customer (...) which is an exception case" - an "exception case" being anyone whose direct debit fails due to cancellation or insufficient funds. In practice this excludes the poorest households from this supposed state handout, and puts pressure on those cancelling their direct debits in solidarity with them, to try to break the strike.

Stop paying your bills - whether out of choice, or because you can't afford them - and the energy companies get to keep their taxpayer-funded bailout, but you never get the benefit of it.

EDF also revealed they will be using the same scheme to bolster their cashflow at our expense, and many other suppliers will doubtlessly follow. Even if customers do manage to scrape together enough to pay in full, many people will pay more in overdraft fees or interest on other debt taken out to pay their bills than the rebate is worth. 

If British Gas and EDF were trying to show the contempt they have for their customers, they couldn't have done it any better. "We know times are really hard at the moment" reads one email from British Gas - but British Gas are owned by Centrica, the company who notoriously increased their profits five-fold to £1.3 billion in the first half of this year. Their CEO has a salary of nearly £900,000 (plus vast bonuses) while thousands of households are struggling to make ends meet. 

It's clear that what is happening is an informal alliance of government and big business, aiming to transfer wealth from the poorest to the richest. 

Across Europe, other countries have also seen price increases in the last year. But Britain stands out for the inaction of its government. Other countries have at least partially reduced the impact of price increases by decoupling retail prices from wholesale gas costs, giving grants and cutting taxes that affect the working class while increasing taxes on corporations. Moreover, British people were already under the severe pressure of Europe's highest housing costs, highest child care and social care costs, combined with proportionally ill-paid and precarious work.

In Britain, even the puny aid comes with conditions. By working together with energy companies to make even the government "assistance" a way to force us into paying even more, they are showing how important it is for people to take collective action together. This reveals how worried they are about the prospect of large numbers of people joining together to refuse to pay, and reinforces how important it is that we work locally to hit that goal. 

Unlike the government scheme, our demands don't rely on subsidising highly profitable companies from the public purse. Our tax money shouldn't go towards keeping afloat the failing energy companies that have ripped us off for so long. Our bills need to come down to an affordable level, which can only be done by resetting the cap and using the obscene profits made by energy producers to cover the cost. This is just the beginning of a conversation about how we can reconfigure the broken energy market to serve our needs.

Read our demands: what we're striking for.