Overview:

As UK energy bills soar, the prospect of mass civil unrest is a very real possibility. A winter of discontent looms large.

Reading Time: 2 minutes

Martin Lewis is a very well-respected money advice expert who has his own website and has hosted many TV shows, as well as being a ubiquitous voice on the news and on radio. Recently, he has predicted that there will be civil unrest in the UK if energy bills continue to rise in the way they already have.

Lewis predicts, in his “warning video,” that “the winter coming is going to be bleak. I believe that, unless action is taken, we are facing a potential national financial cataclysm…. We are sitting on a financial time bomb.” Lewis is usually on the money with his predictions and analyses.

YouTube video

In the UK, the energy regulator, Ofgem, instituted a price cap on energy bills in January 2019, as Lewis’ own website explains, saying they had…

…the aim of preventing the millions of households on certain expensive variable tariffs from being ripped off.

It limits what you pay for each unit of gas and electricity and sets a maximum daily standing charge (what you pay to have your home connected to the grid). It’s based largely on wholesale energy prices (those firms pay) and applies only to providers’ standard and default tariffs.

These tariffs, which most people are on, have traditionally been £100s/year more than the very cheapest deals on the market. (You’ll be on one usually if you’ve never switched, if you don’t switch again after your fix ends, if your provider goes bust or if you move home).

But the market is in crisis right now. Wholesale prices are at unprecedented highs, so there is nothing meaningfully cheaper than price-capped tariffs.

The price cap increased by a massive 54% in April, and is predicted to rise 65% again in October, with a further rise into the new year. This means, before April, a typical house would have been paying £1,277 per year for energy in the UK. Next January, that should be about £3,360 per year. As Lewis says, this could be conservative and may well be more.

This is a staggering increase and it affects everyone. There are many arguments to say that energy company profiteering is what is largely underwriting a second wave of inflation. But instead of dealing with this, the Bank of England is calling for wage restraint. This is a problem because wages are not rising in line with inflation due to this inflation wave not being part of a wage-price spiral, but the unique scenario of profiteering in a sector that underwrites the cost of all other products: the energy and fuel sector.

Forbes and the EPI have also documented how inflation is being underwritten by profiteering, though not just in the energy sector.

For those on the breadline, such a huge rise in one of the fundamental costs of living is unsustainable. Lewis, in his warning video, sees that winter will require the opening of public spaces to house people for warmth who can’t afford to pay to heat their homes: public buildings, local councils, universities, and libraries.

And he predicts civil unrest in the form of mass non-payment. He’s gathered this sense from the huge following he has online and with people to whom he speaks. While mass non-payment might not sound too stark, it is worth understanding the chaos that would cause but also what happened the last time the public had to pay more than they were happy with: the poll tax riots.

A winter of discontent is on the UK horizon.

Jonathan MS Pearce

A TIPPLING PHILOSOPHER Jonathan MS Pearce is a philosopher, author, columnist, and public speaker with an interest in writing about almost anything, from skepticism to science, politics, and morality,...