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Category: Trades Union Congress

  • TUC announces plan to tackle ‘soaring’ energy bills which favours workers over shareholders

    The Trades Union Congress (TUC) has published plans to cut bills by nationalising energy suppliers. It’s a proposal which will likely prove popular with voters. Unfortunately, however, it’s unlikely to find much support from the leadership of either of the two main political parties.

    The private energy scam

    According to a press release from TUC:

    • Energy retail company bailouts have so far cost £2.7 billion, while taking the Big Five energy retail firms into public ownership would cost just £2.85 billion
    • Ofgem expected to announce energy cap increase to at least £3,200 next month
    • “It’s time to lift the burden of failed privatisation off families”, says TUC

    Public ownership of energy retail companies would reduce bills, speed up energy efficiency improvements to UK homes, and cut carbon emissions faster, according to a new TUC report published today (Monday).

    The union’s ‘Affordable Energy Plan’ aims to keep bills down through the following measures:

    • Ending shareholder dividends, making more money available to cut bills
    • Unlocking incentives to make homes energy efficient
    • Enabling pricing structures with much lower costs for basic energy needs

    TUC notes that it’s publishing the plan ahead of an announcement expected from Ofgem in August “of a new increase to the energy price cap”.  This increase:

    is expected to bring average bills to more than £3,200 – a rise of over 150% in just one year.

    According to Martin Lewis, that all-time high may not even be the end of it:

    Privatisation has ‘failed’

    TUC stated that:

    Since June 2021, the UK government has spent £2.7 billion bailing out 28 energy companies that collapsed after putting short-term profits ahead of long-term stability – companies like Bulb and Avro Energy.

    Ministers have also had to allocate £12 billion to directly cut the cost of household bills.

    However, the TUC says that if energy firms had already been in public ownership, bills could have been kept down without such a high cost to the public purse.

    In France, where national provider EDF is currently 84% publicly owned, household energy bills rose by just 4% this year. The French government as the main EDF shareholder was able to instruct the firm to cut profits to keep prices down. The TUC says if energy retail was publicly owned, the UK would be able to take a similar approach.

    People have noted what the nature of EDF means for UK customers:

    ‘The long-term burden of privatisation’

    Looking at the broader perspective, TUC said:

    Even before the current energy price crisis, families were already paying the price of privatisation through higher bills to fund private profits.

    Research by Common Wealth shows that UK energy retailers paid shareholders more than £23 billion in the last 10 years. And most of these dividends went overseas to large foreign shareholders.

    A publicly owned energy provider could have used this wasted cash to reduce bills and bring forward energy efficiency measures to make family homes cheaper to heat and power.

    But the TUC says that privatisation has held back energy efficiency home improvements. Energy companies are incentivised to sell more energy to make profits for shareholders – not to invest to cut energy use.

    On the ‘affordability’ of nationalisation, they added:

    … nationalising the Big Five energy retail companies (British Gas, E.ON, EDF, Scottish Power and Ovo), would cost £2.85 billion.

    By contrast, the government has already spent £2.7 billion over the past year bailing out failed private energy firms, including £2.2 billion for just one firm alone – Bulb.

    Taking these five companies into public ownership would move more than 70% of households out of the failed private energy retail system.

    And it would cost only around a quarter of what ministers will spend this year protecting families from the soaring prices charged by private energy retailers.

    They also said:

    Publicly owned energy companies would have a strong incentive, and the capacity, to roll out energy efficiency improvements to all UK homes, significantly reducing bills.

    And they will have the power to set energy prices aimed at affordability for customers, rather than maximising profits for shareholders.

    The TUC plan sets out how a publicly-owned energy retail system could deliver a social pricing structure that lets everyone afford the energy they need to cook, clean, and stay warm all year round, while those with extravagant energy use pay more per unit.

    Under the TUC’s plan, every household would receive a free band of energy to cover basic lighting, heating, hot water and cooking. And bills for low-income families would be capped at 5% of typical household income.

    Professor Prem Sikka wrote about the potentials of nationalisation for Left Foot Forward:

    ‘Energy firms rinsed us’

    TUC general secretary Frances O’Grady said:

    Families should be able to afford their basic energy needs.

    But energy firms rinsed us for private profit in the good times, then doubled our bills when the going got tough. That’s why bills are soaring now.

    It is time to lift the burden of failed privatisation off families. No more shareholder pay-outs. No more fat cat bonuses. No more take-the money-and run-companies that collapse overnight. Just fair prices from an energy company owned by us all and run for our benefit.

    O’Grady added:

    Everyone should have enough affordable energy to cook, clean and keep their home warm.

    But anyone heating a private swimming pool should expect to pay a higher rate for their luxury lifestyle.

    O’Grady has also been speaking about how increased energy bills will be particularly hard to bear for wage-poor Britons:

    Ordinary people have already been struggling as a result of the cost of living crisis, also called the Tories’ class war. The government needs to take immediate, concrete action to address the astronomical rise in bills. Because if it doesn’t, the consequences are likely to be devastating.

    Featured image via stevepb / Pixabay, under Pixabay license, resized to 770px x 403px

    By John Shafthauer

    This post was originally published on The Canary.

  • The government isn’t doing enough to protect exploited minimum wage workers

    The Department for Business, Energy & Industrial Strategy (BEIS) has published a list of over 200 businesses that have failed to pay their employees the national minimum wage. Low Pay Commission chair Bryan Sanderson stated that the aim of the list is to “help protect low-paid workers from unfair treatment”. But the government needs to do more to protect the rights of vulnerable minimum wage workers.

    Widespread exploitation of minimum wage workers

    Investigations by Her Majesty’s Revenue and Customs (HMRC) conducted between 2014 and 2019 identified 208 firms that failed to pay £1.2m to 12,000 workers, breaking national minimum wage laws.

    37% of companies listed were found to have wrongly deducted pay from workers’ wages, including for uniforms. 29% failed to pay employees for every hour they spent working, such as during mandatory training or trial shifts. 16% paid the incorrect apprenticeship rate. 11% failed to increase wages in line with the minimum wage increase, or paid younger workers at a lower rate.

    House of Fraser, Schuh and Waterstones are among the UK employers named. House of Fraser failed to pay £16,235.19 to 354 employees. Schuh failed to pay £807.38 to 39 staff. And Waterstones failed to pay nearly £8,700 to 58 staff.

    The national minimum wage for workers over the age of 23 is currently just £8.91. After years of wage stagnation and rising living prices, the Trade Union Congress TUC has argued the government needs to raise the legal minimum wage. It says it should be at least £10 per hour to avoid more workers being pushed into poverty. This makes employers’ theft of workers’ wages all the more appalling. £8,000 is pocket change for these corporations, but could be make or break for their minimum wage employees.

    In August 2021, the government published another list which “named and shamed” 191 businesses found to be breaking the minimum wage law. Employers on this list included John Lewis, Sheffield United, and The Body Shop International. HMRC found that companies owed a staggering £2.1m to more than 34,000 workers. Together, these lists demonstrate just how widespread the exploitation of minimum wage workers is.

    The government must do more

    TUC general secretary Frances O’Grady told the Independent:

    Every worker deserves fair pay for their work. There’s no excuse for not paying the minimum wage. Firms who cheat staff out of their hard-earned money deserve to be named and shamed.

    She added:

    We also need to see prosecutions and higher fines for the most serious offenders, especially those who deliberately flout the law. Minimum wage underpayment is still far too common in Britain.

    Although 6,500 breaches had been identified, as of August 2021, courts had prosecuted just six employers for paying employees below the minimum wage in the last six years.

    The government has ordered guilty employers to repay their employees. But if the government is serious about tackling the widespread exploitation of minimum wage workers, it must protect them by strengthening workers’ rights, supporting trade unions, and outlawing zero-hours contracts. ‘Naming and shaming’ companies isn’t enough. The government must hold these wage thieves to account.

    Featured image via Christopher Bill/Unsplash

    By Sophia Purdy-Moore

    This post was originally published on The Canary.