This week, the UK Conservative Party responded to the ongoing energy crisis gripping Britain. For millions of households around the country, the policies proposed will be a catastrophe. This presents us with a familiar story, revealing – once the again – the ideological dogma and staggering-disregard for the lives of others so endemic in the Conservative Party today.
Across Europe, energy market prices have surged over the last year. Households will pay an average of 54% more for energy this year than in 2020. After a slew of energy supplier failures, the UK energy regulator Ofgem has lifted the energy bill cap (to near £2,000 per year) to reflect the fourfold increase in energy markets.
The one-off £200 rebates offered in response by the Conservatives are derisory, only covering a third of the increase in energy prices. People around the country were already experiencing a cost of living crisis, after a global pandemic which has further entrenched inequalities and a decade of austerity. In 2021, nearly 20% of the UK population were living in poverty and millions were using food banks. Now, these changes are expected to drive millions more households into fuel poverty.
While British households receive unsustainable energy price increases, energy producers are earning record profits.
Shell recently announced historic profits – $19.3bn in 2021, compared to $4.85bn in 2020 – on the back of energy markets quadrupling. This occurs even as governments around the world continue to subsidise fossil fuel companies, spending $180bn a year. In Europe (2019), Britain led the way in fossil fuels subsidies, spending €12bn a year compared to €8.3bn on renewable energy.
The Conservative Party justifies their position, saying they cannot stand in the way of market prices. This is a falsehood. Around Europe governments are choosing to protect the welfare of their citizens in the face of the energy crisis. In France, significant energy price caps have been put in place. In Spain windfall taxes have been imposed on energy producers. And in Germany, surcharges on bills supporting renewable energy have been slashed and renewable energy will receive extra subsidies from higher carbon taxes. A windfall tax in the UK, alongside subsidies for poorer households, would be step in the right direction.
Instead, Britain remains mired in ideological deference to market-forces, protecting capital accumulation at the expense of society. This is the essence of neoliberalism, the foundation of Conservative ideology that has been imposed on us persistently since the 1980s. Just as banks were let off the hook for the 2007/8 financial crisis and society was made to pay the price in the decade of austerity that followed, the rights of energy companies to earn vast profits at the expense of society is being protected now.
Yet it is precisely such ideological dogma that has made us so unprepared for an energy crisis like this.
It was the neoliberalism of the UK Conservative Party that began the privatisation of the energy industry in the 1980s. The result today: an oligopolistic market for energy. Large utility services like energy – alongside rail, water, and others – invariably lack competition after privatisation because there are such high barriers to entering the market. Now, the majority (77%) of Britain’s household energy market is controlled by a small number of firms; the ‘Big Six’. Market dominance allows these firms to raise prices – they’ve gone up 50% between 1996 and 2018 – increase profit margins, and pay-out billions in dividends unimpeded.
Nothing about this is necessary or inevitable. There are publicly-owned energy companies all over the world. In Germany, two-thirds of electricity is bought from municipally owned energy companies. Denmark has a publicly owned transmission grid, and the highest proportion of wind power in the world. In France, most people buy their electricity from EDF, majority-owned by the French state, while in Italy most do so from AU, a company owned by the state regulator.
Publicly owned energy in Britain wouldn’t have stopped the energy crisis. But because a publicly owned service would be run in the public interest, when such a crisis occurs money wouldn’t be prioritised for shareholders and surpluses could’ve cushioned the worst impacts. Taking British energy back into public ownership would offer better value to customers, saving the public £3.7bn per year, all while providing local jobs and enabling the accelerated roll out of renewable energy.
In fact, it is precisely Britain’s deference to the market and fossil fuel companies that has delayed our investment in renewable energy.
Energy companies have spent years extracting dividends and only started investing in renewables when governments provided public-finance. Experts and scientists have shown that a greater emphasis on developing renewable energy in recent years would have softened the blow of the energy crisis. The longer we wait to make the required investments in renewable energy, the more at risk we are to future energy market volatility as the environmental crisis progresses.
Given the existential threat posed by environmental crises, this inertia is perilous and absurd. The UK’s Office for Budget Responsibility estimates that the cost for Britain to get to net-zero by 2050 is less than either our coronavirus (COVID-19) pandemic response or the response to the 2007/8 financial crisis. We have the technological and financial capacity to make the transition, but our government chooses not to make the commitment. Once again, Conservative recalcitrance protects markets and profits as they are, rather than the wellbeing of people or planet.
So, when you next see some Conservative politician looking stoic and concerned about the crushing energy bills you’ll be facing over the next year, trotting out some line like “we’re all in this together” or “we’re doing what we can” or “we can’t interfere with the markets”, just understand this simple truth: the energy crisis currently gripping Britain is a political choice.
Around the world, governments make political choices that prioritise the needs of society and planet over big corporations and profits.
Why can’t ours do the same?
Great article Stef.