“The Conservative government’s decision not to help the people or sectors most affected by the energy crisis is the exception, not the rule. Here is how other governments across Europe are providing support.”
By Nina Reece, the Trades Union Congress
Governments across the world are raising wages, cutting tax and announcing hefty financial aid packages for people and workplaces affected by the energy crisis.
Last month, the Chancellor Rishi Sunak announced a package of support that he claimed would help UK workers and businesses survive crippling energy costs. But it failed to boost pay, raise benefits or help low-income households.
War in Ukraine is exposing the cracks in a global energy system that privileges profit over people and the climate and is too reliant on international trade in fossil fuels. The result is a massive increase in energy costs that is hurling people into poverty while energy companies announce another year of eye-watering profit.
But the Conservative government’s decision not to help the people or sectors most affected by the energy crisis is the exception, not the rule. Here is how other governments across Europe are providing support.
In Germany, €16billion (£13.4billion) has been made available to ease the burden of rising costs. The support package includes a €9 pass for commuters, giving them a month’s unlimited use of public transport. Making public transport more accessible in the UK is key to reaching our emissions targets.
There is a one-off €300 tax cut for individuals, extra discounts for low-income families and fuel taxes will be cut for three months, with the price per litre cut by €0.30 for petrol and €0.14 for diesel.
Importantly, this package includes a commitment to reducing German reliance on gas, oil and fossil fuels long term.
Germany is also set to raise the national minimum wage by 15 per cent, benefitting nearly 6.2 million low-paid workers – two thirds of them women – giving Germany the second-highest minimum wage in Europe. The rise, agreed as part of the coalition deal, will also cover self-employed and flexible workers.
A six million Swedish kronor (£473m) pot was set aside by the Swedish government to soften the impact of soaring bills. This may not sound like a lot, but with population that is fraction of that of the UK – it is significant. The government has also issued winter bill subsidies of up to 6000 kronor (£488) for 1.8m households from winter into 2022.
The Norwegian government’s package of measures to help households totals more than eight billion kronor (£664m). In January, Norway even committed to covering 80 per cent of electricity costs for a short period whenever the rate for electricity is above 70 Norwegian øre (6p) per kilowatt-hour.
President Macron is targeting energy companies.
EDF, the state energy provider, will charge electricity at below market rate and will take an €8.4bn financial hit. It has also been ordered to sell nuclear power to rivals at below current market rate as its reactors generate 70% of the country’s electricity.
This month, the CEO of Total Energie has also announced a freeze on dividends. In the UK, despite massive profits, no caps or restrictions have been placed on the Big Six energy providers.
The French government has also cut electricity taxes in a bid to slow the increase to bills. While here in the UK, gaps in the Chancellor’s support package means the energy crisis will hit the poorest families the hardest, in France 5.8million low-income households were given a €100 payment for energy bills in January this year.
The Spanish government’s €16billion response to the energy crisis is the most comprehensive. The focus is on curbing profits and protecting jobs.
Some €2billion will be raised from a windfall tax on energy providers. €500million in subsidies will be provided for electricity-intensive industries and companies that receive this aid won’t be able to dismiss staff to balance out their rising energy costs.
€10billion of state loans will also be given to companies in other industries who are forced to spend more on energy. There is protection for truckers and professional drivers with €450million in direct aid for transport professionals.
And for families and individuals, a fuel sales subsidy of €1.4billion will reduce prices by €0.20 a litre, making a full tank about €9 cheaper, far better than Rishi Sunak’s 5p cut to fuel duty which would take just £2.25 off the cost of a full tank.
These responses from other countries show that our government can do more to help families and industries survive what the Governor of the Bank of England calls a ‘historic shock’ to our living standards. Households currently face an annual energy bill of £2000 and prices are to rise again in October.
That’s why the TUC is calling for an Emergency Budget: Rishi Sunak must come back and provide a proper package of support for families.