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Tuesday, June 28, 2022

Britain’s consumer champions are in top form: it really must be time to worry

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<p><figcaption class=Photographer: Linda Nylind/The Guardian

In the midst of the spiraling energy cost crisis, two fascinating views emerged for different reasons. The first was from radical accountant Richard Murphy, Professor of Accounting Practice at the University of Sheffield School of Management, who did a breakdown of energy costs, trying to get to the bottom of why prices were rising so precipitously. I assume your thoughts would contain many graphs, which I would almost cease to understand the moment they stopped being pie charts, but it was actually devastatingly simple. Only 36% of “a typical bill” comprises the actual cost of energy, the rest is taxes, delivery, billing, customer services, environmental schemes and profits. So even if the price of gas doubles, triples or skyrockets, only a little over a third of your bill should double, triple or go crazy, the other costs are static, plus or minus inflation. Murphy posed a second question, why should people who get their energy from renewables suffer the same increases? He ran some speculative numbers on how much of his new bill would go to power company profits. He was unable to find any explanation for the upcoming price increases, other than exploitation.

Related: Huge UK power bills would cause some to ‘starve or freeze’, warns Martin Lewis

The other opinion came from Martin Lewis, the founder of Money Saving Expert, a much less political figure than Murphy. It takes a certain kind of sober person to bring their amount of seriousness and purpose to make sure you’re on exactly the right mobile phone rate. Speaking on the Today show last week, he was absolutely passionate. He would not sit idly by and listen to a Conservative minister blame the war in Ukraine for the cost of living crisis. He wouldn’t accept that no one could weather the next squeeze with a little planning and adjustments. His predictions were absolutely strong: without serious intervention from the chancellor, poverty would become so severe that social unrest would follow.

When financial experts are so interesting, it’s time to really worry. But, also, thank goodness for interesting counters that drag corporate tactics of political diversion and flam-flam back to reality.

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