Energy bills are squeezing businesses and people as UK costs soar


A high street decorated with British Union Jack buntings in Penistone, UK. The End Fuel Poverty Coalition has warned that “a tsunami of fuel poverty will hit the country this winter”.

Bloomberg | Bloomberg | Getty Images

LONDON — Faced with rising energy bills, rising costs and rapidly declining consumer purchasing power, small businesses in the UK are struggling to make ends meet.

New data on Wednesday showed that UK inflation rose to a 40-year high of 10.1% in July, while food and energy costs continued to rise, exacerbating the country’s cost of living crisis.

The Bank of England expects consumer price inflation to hit 13.3% in October, with the country’s average energy bill (set via a price cap) expected to rise sharply in the fourth quarter, eventually reaching the annual £4,266 ($5,170) will exceed in the beginning. 2023.

On Wednesday, a director of British energy regulator Ofgem resigned over his decision to add hundreds of pounds to household bills.

Real wages in the UK fell 3% annually in the second quarter of 2022, the strongest decline ever, as wage increases failed to keep pace with the rising cost of living.

A new survey published Friday also found that consumer confidence fell to its lowest level since measurements began in 1974.

‘Absolute madness’

“While energy price caps don’t directly affect businesses, millions of small business owners are still dealing with higher utility bills at a time when costs are rising in most areas of operations,” said Alan Thomas, UK CEO at insurance company Simply business.

“At the same time, consumer purchasing power is falling as Brits are cutting back on non-essential spending, hurting the books of SMEs. [small and medium-sized enterprise] owners.”

This review was echoed by Christopher Gammon, e-commerce manager at Lincs Aquatics – a Lincolnshire store and warehouse that supplies aquariums, ponds and marine life.

The company has seen its energy costs rise by 90% since the start of the war in Ukraine, Gammon told CNBC on Thursday, and the owners anticipate further increases in the coming months.

“We are fighting rising costs by switching everything to LED, solar panels, wind turbines (planning in progress) and shutting down unused systems,” Gammon said.

“We’ve also had to increase the price of products — most of these were livestock, because they now cost more to care for.”

Customers are increasingly withdrawing from keeping fish and reptiles due to maintenance costs, and on Wednesday the store had a customer bring in a snake they could no longer afford to care for.

Rising costs forced Lincs Aquatics to close a store in East Yorkshire, laying off several workers, while trying to offer pay increases to staff at the two remaining Lincolnshire locations to help them through the crisis.

The company is also expanding its online store due to rising in-store maintenance costs as heating water for marine aquariums and purchasing pumping equipment become more and more expensive.

In early July, a quarterly survey by the UK Chambers of Commerce found that 82% of UK businesses saw inflation as a growing concern for their business, with growth in sales, investment intentions and confidence in longer-term sales all being a concern. decreased.

“Businesses are facing an unprecedented convergence of cost pressures, with key drivers coming from raw materials, fuel, utilities, taxes and labor,” said David Bharier, BCC’s chief research officer.

“The ongoing supply chain crisis, exacerbated by the conflict in Ukraine and the lockdowns in China, has exacerbated this.”

BCC Director General Shevaun Haviland added that “the red lights on our economic dashboard are starting to blink,” with nearly every indicator deteriorating since the March survey.

Phil Speed, an independent distributor for the multi-service utility Utility Warehouse based in Skegness, England, works with brokers to find energy deals for business customers.

He told CNBC earlier this week that for the first time in 10 years, he couldn’t have gotten a better deal for a customer than their out-of-contract rate — the typically expensive rates paid when a company or individual doesn’t have an agreed-upon deal.

“I think the unit rate she quoted was 60p [pence] a unit for gas, which is just ridiculous. I imagine we would have watched 5 or 6p a year ago. It’s just sheer madness,” said Speed.

“We have no idea what will be presented to us because we have no idea what will happen. The price just gets ballistic. No one is going to buy it.”

The cost of gas for both businesses and consumers is only expected to rise during the colder winter months. Speed ​​noted that local cafes that cook on gas will likely struggle as they have no choice but to keep using it unless they can replace gas appliances with electric ones.

‘Shouting very loudly at someone’

Rail strikes have brought the country to a standstill for several days all summer and look set to continue, while postal workers, telecom engineers and dock workers have all voted to strike as inflation hurts real wages.

Liz Truss, a favorite of Conservative leaders, was forced into a dramatic reversal earlier this month in a plan to cut wages in the public sector outside London, which would have cut wages for teachers, nurses, police and armed forces alike.

Local authorities recently offered state school support staff a flat-rate pay raise of £1,925 a year, representing a 10.5% increase for the lowest paid staff and just over 4% for the highest earners, under pressure from three of the largest trade unions in the country.

A woman in her early 50s — a support staff member at a Lincolnshire state school who asked not to be named due to the sensitive situation and concerns about public retaliation — told CNBC that years of wage cuts had resulted in much lower costs in real terms. paid public sector workers struggling to make ends meet.

In 2010, in the wake of the global financial crisis, the UK government announced a two-year pay freeze for public sector workers, followed by an average 1% cap on public sector pay, which was lifted in 2017. , with average wage increases increasing to about 2% in 2020.

While the 10.5% increase for the lowest paid school support staff will ease the pressure, the woman said her energy costs had doubled and her private landlord had tried to raise her rent by £40 a month, which she had not agreed to and which may mean she would have to sell her car to cover basic living expenses.

She called on the government to temporarily cut “fixed costs,” a fixed daily amount that households pay on most gas and electricity bills, regardless of how much they actually use, and step up its efforts to cover one-time “windfall benefits.” to earn back. from energy companies such as BP, Shell and Centrica, which report record profits.

“I think this is an even bigger crisis than… [the Covid-19 pandemic]because this will not only affect the lower earners, but maybe the middle earners too, because I don’t see how anyone can absorb that kind of energy cost,” she said.

The pressure on businesses and the government to raise wages in the face of the skyrocketing cost of living has raised further concerns about the anchoring of inflation, but this consideration is a long way from the reality that working families are increasingly more forced to cut back on essentials.

“It’s good to say ‘we can’t keep raising people’s wages, that will make the cost of living worse’, but the cost of living is already out of control, and the only way for people to survive is when their wages rise,” the woman said.

“I know it’s a catch 22, but I don’t really see a way around that — you have to eat.”

The situation in recent months, even before the expected worsening of the energy crisis, is already taking its toll.

“I just think I’m a very honest, hard-working person. I’ve never committed a crime, I’ve always done things right, but now I’m starting to feel like you’re not getting anywhere in this country,” she said.

“For the first time in my life I want to go out and protest and yell really loudly at someone, and you just think ‘what does it take?'”

The Valley Voice
The Valley Voice
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.


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