Pressure is mounting on the UK government as it faces a winter of discontent
A government minister openly saying it will be a “very difficult winter” is a sign of how dire the situation could get for families across the UK in the coming months. In normal times, no government would admit this to the media. But as gas prices rise and a cut to universal credit loomed, this is exactly what business secretary Kwasi Kwarteng found himself doing on BBC Breakfast two weeks ago.
“It’s a difficult situation. It could be a very difficult winter,” Kwarteng said. “That’s why, as energy minister, I’m very focused on helping people that are fuel poor. Universal Credit... is an issue for the chancellor and the work and pensions secretary, I’m speaking to them a great deal about it.”
The gas price hike has led to no less than seven energy companies folding in the last eight weeks. While energy regulator Ofgem had stepped in to ensure no one’s central heating is turned off, consumers could be put on a more expensive tariff. Hundreds of thousands of customers will now be heading into winter with steeper energy bills than they anticipated.
Kwarteng insisted the government was “protecting customers” through the energy price cap, which is designed to stop excessive hikes in bills, but even that was increased at the start of October. Half the population will see their default tariff rise by £139 to £1,277 a year – hardly spare change in the context of already squeeze household finances.
The biggest cause of the increasing wholesale gas prices – up 250 per cent from the start of the year, 70 per cent in August alone – is economies across the world beginning to reopen, causing a huge surge in demand. It was, perhaps, a difficult situation to avoid.
But the sudden increase in energy bills will also coincide with the end of a major lifeline for families over the last 18 months.
This cut risks causing immense, immediate, and avoidable hardship
The £20 per week top-up to Universal Credit brought in in March 2020 was broadly welcomed at the time. It may not seem much, but it was enough to help families struggling with reduced income as a result of furlough. But as of 6 October (incidentally the same day the Prime Minister will address the Conservative Party conference in Manchester), that support is to be removed. Income for families in receipt of the benefit will drop by £1,040 a year. The Joseph Rowntree Foundation predicts this will push half a million people (including 200,000 children) into poverty.
An open letter signed by anti-poverty campaigners, charities and professional groups from across the UK warned: “We are rapidly approaching a national crossroads which will reveal the true depth of the government’s commitment to improving the lives of families on the lowest incomes.
“We all want a social security system that supports families to escape poverty rather than pulling them deeper into it. However, this cut risks causing immense, immediate, and avoidable hardship. A strong social security system is a crucial first step to building back better.”
But the ‘Keep the Uplift’ campaign has fallen on deaf ears, with the DWP repeatedly highlighting the move was only ever meant to be temporary. Kwarteng said the government had spent a “huge” amount of money on supporting families through the pandemic, but “there was a debate about how long we could afford this”.
Little thought seems to have been given to how the families facing destitution can afford it.
Unemployment in the UK already stands at 4.6 per cent, a million people were still on furlough by the time it was closed at the end of September and, for too many, wages have not increased in line with living costs.
Meanwhile the impact of Brexit may be beginning to be felt in food and transport prices. Inflation leapt up by 3.2 per cent in August and Tesco boss John Allen has said he expects food prices to rise by up to five per cent this winter. This has been attributed to supply issues – specifically, there are not enough lorry drivers to get the goods to shops.
The pressure on the system was obvious with the petrol panic in recent weeks. Thousands of filling stations were left without fuel because there was no one to drive the tankers, leading to panic buying and long queues.
This feels more like an attempt to fix bad headlines than fix the actual problem… there hasn’t been action until even more gaps appeared on supermarket shelves and cars started queuing for fuel
The UK Government has now said it will offer up to 5,000 non-UK lorry drivers temporary visas to limit disruption in the run up to Christmas. Ministers resisted the idea when it was proposed by the Road Haulage Association (RHA) in the summer. Indeed, right up until two days before the announcement, transport secretary Grant Shapps was telling the press temporary visas could “make the situation worse” by “undercutting” British drivers.
He later said the visas would only run until Christmas Eve so as to limit reliance on non-UK drivers. He went on to blame an “irresponsible briefing from one of the road haulage associations” for the panic buying.
He added: “There has been a shortage [of HGV drivers] for a very long time, so this is nothing new. But as soon as you say to people there’s a shortage, people tend to react.
“It’s not required. There is plenty of petrol in the country. If we all go back to buying petrol as we would normally buy petrol, this big package is going to do things in the short term.”
Which begs the question, if these shortages were already known about, why has not enough been done to tackle the problem before now? The RHA warned that before the pandemic there was a shortage of 60,000 drivers – but a combination of Covid, Brexit, an ageing workforce and the shutdown of driving tests has driven that number to over 100,000.
The organisation wrote to the Prime Minister in July, warning: “We firmly believe that intervention from the Prime Minister/Cabinet Office is the only way that we will be able to avert critical supply chains failing at an unprecedented and unimaginable level.
“Supermarkets are already reporting that they are not receiving their expected food stocks and, as a result, there is considerable wastage… Furthermore, the Christmas build that retailers begin in August/September will be seriously affected – all of which will affect government’s ability to build back better.”
The temporary visa scheme will also be extended to 5,500 poultry workers following concerns of a turkey shortage at Christmas. The processing of turkeys has historically relied on labour from the EU.
While these short-term fixes may alleviate the problem for now, some thought must be given to how rising costs are going to hit already struggling businesses and, ultimately, the households who buy the food.
Responding to the announcement, James Withers, chief executive of Scotland Food and Drink, said: “This feels more like an attempt to fix bad headlines than fix the actual problem… Whilst recognition of pressures in the haulage and poultry sector is welcome, this is a problem throughout the food supply chain and I seriously doubt that 10,000 three-month visas are going to cut it. It may help the driver situation a little, but it won’t address the chronic staff shortage in food production.
“What is frustrating is that this move to offer extra visas has felt increasingly inevitable for weeks, if not months. Yet, there hasn’t been action until even more gaps appeared on supermarket shelves and cars started queuing for fuel. At this stage, my instinct is that this is too little, too late to make a real difference to the Christmas trade.”
The phrase ‘perfect storm’ may be overused, but the combination of the cut to Universal Credit, the mounting impacts of Brexit and the gas price hike could make this winter particularly dreich. The immediate question is how we help people weather this winter – but the bigger question is how we prevent the storm clouds from forming in the first place.