The New British Prime Minister, Liz Truss, recently announced her plans to help families and households through the current cost of living crisis.
The main policy to be introduced is an energy price cap which limits the average amount each household will pay capped at £2500.
NB this policy doesn’t mean that every household will pay a maximum of £2500 , that figure is the ‘easy to understand’ figure based on what the new price-per-unit of energy that OFGEM has to work with will be, which will mean an average house going forwards will be paying £2500 on energy until October 2023 (those calculations based on how much energy an average household has been using historically).
Of course if one ‘average household’ keeps the heating up at a toasty 25 degrees all winter they will still be paying more for energy than a similar household which keeps its thermostat at a more reasonable 18 degrees.
And so larger houses will be paying more than £2500, smaller houses and flats probably less than £2500.
HOWEVER, the cap on the unit-of-energy price still benefits the rich more than the poor, and. one simple chart from The Guardian shows how…
According to the figures above the following types of household save the following amounts per year with Truss’ new energy policy…
- Detached houses save £1400
- Semi-detached save £1150
- Mid terraced save £950
- Purpose built flats save £650
And as a general rule it is the wealthier and higher income earners who live in detached houses, while it’s the working and lower classes who live in mid terraced and flats.
So what we see here is that this Tory Policy saves the average wealthy household £750 a year more than the average poorer household.
This becomes clear when we see just HOW MUCH the richest households spend on energy, which was revealed in a recent 2022 report: A ‘Variable Energy Price Cap’ to Help Solve the Cost-of-Living Crisis by the National Institute of Economic and Social Research…
As you can see from the above the richest households spend almost twice as much on energy as the poorest households, which means any uniform energy price cap will benefit them proportionately more.
This is one of the reasons why the above report proposes a more nuanced policy approach of a variable cap and energy prices increasing the more households use, which would help the poor more compared to the rich and make the wealthier households contribute more to dealing with rising energy prices.
According to Bloomberg the current Tory policy could cost tax payers as much as £130 billion over two years, which is a CHOICE by a TORY to make the people pay rather than energy companies who are likely to make sufficient profit to be able to pay for the ENTIRE increase themselves and STILL make a decent profit on top!
The Tories allow the Corporations to Keep their Profits
According to UK Treasury figures Energy firms are expected to make an additional ‘unexpected’ £170 billion in profits over the next two years due to the increase in energy prices.
One policy the government could have pursued to tackle rising energy prices is thus to use a windfall tax on the two major UK energy corporations – Even just a 10% tax on £170 billion would raise £17 billion to help weather the storm.
However Liz Truss is part of the same Transnational Elite as the international energy companies. She used to work for Shell and she accepted a £100 000 donation from BP towards her leadership campaign.
And now she is repaying them by guaranteeing to allow them to keep ALL of their profits from this crisis, be effectively using tax payers money to pay them everything above the price cap for at least another year.
The most likely situation is that MOST of our
New Fracking and Oil Exploration Licenses
A more longer term policy (or lack of it) is to issue several new licences to allow firms to drill and frack for oil and natural gas in the North Sea and (probably) poorer parts of the United Kingdom.
Given Liz Truss’ pro-corporate and light regulation stance it’s unlikely these licenses will come with terms which see the profits from such resources go back to the people – far more likely is light regulation, low tax and profit extraction to distant lands.
Liz Truss’ Energy Policy – Relevance to A-level sociology
This policy is very much neoliberal – she is not taxing large corporations and giving out new licences for corporations to suck out our natural resources (NB we don’t have details, but I’m anticipating very lax regulation here).
We might even call this hyper neoliberalism – Truss is proposing a straight transfer of tax payer funds to Corporations – naked and visible and no effort to hide it, usually with pro-privatisation policies this is obscured, but not here.
Meanwhile her energy cap does little to help the poorest and more, proportionally to help the richest.
It’s also worth going back and reading Naomi Klein’s The Shock Doctrine – that seems to apply here – we have a crisis and the right wing use it to pass even more wealth to the rich…
So this evidence also suggests support for the Marxist view that the government, ultimately (or at least in its current form) works in the interests of the elites and Transnational Corporations.