Politics

How Europe Is Shielding Folks From Hovering Vitality Payments As UK Waits For New Leaders

All across Europe, households are facing a sharp rise in energy bills driven by sky-rocketing gas prices, a large part of a result of the war in Ukraine. But while leaders on the continent are moving forward with relief plans, the UK faces stalemate.

The government is facing growing calls to provide more support to hard-pressed families, but outgoing prime minister Boris Johnson has said he will leave major financial decisions to the new premier.

With the Conservative Party leadership contest between foreign secretary Liz Truss and former Chancellor Rishi Sunak running until September 5, it could be at least another three weeks before the “zombie government” makes a significant intervention.

There are ideas floating in the ether.

The Sunday Times reported on mooted plans where oil companies fund petrol vouchers for pensioners. Under the proposals, the oil giants would have funneled some of their huge profits into a pot that would have been used to help those who are struggling, with BP said to be enthusiastic.

Sunak reportedly vetoed the move, opting for a windfall tax instead, and Truss is said be willing to take another look at it if elected PM.

Meanwhile, Labor has set out a “very strong, robust, costed” £29 billion plan to stop energy bills rising over the winter – paid for in part by an extension of the windfall levy on the profits of the oil and gas companies – by freezing the energy price cap at its current level of £1,971 for six months from October, saving the average household £1,000.

It follows the Liberal Democrats calling for a £36 billion energy bills “furlough” whereby October’s energy bill price cap increase should be cancelled.

So how does the UK’s response compare to that in other big European countries?

UK

The UK’s price cap on bills prevents firms from taking excess profits from the gas and electricity they sell to households. Even so, soaring wholesale prices means bills are forecast to top £4,200 per year for the average British household from the start of January, after already rising to £3,600 in October.

In May, the government set out a £15 billion support package to help households. Every household will receive a £400 pound credit to their energy bills from October.

More than 8 million low-income households in receipt of state benefits are also being given a further one-off payment of £650. Pensioners and disabled people will also receive additional help.

But few think the package is close to what is needed now. On top of what’s already been done, Truss has said she would apply a temporary moratorium on environmental and social levies added to consumers’ electricity bills.

Sunak has said he is in no doubt more support will be needed to help households through the winter, and he would act as soon as it is confirmed precisely how much bills would be increasing by.

France

France has committed to capping an increase on regulated electricity costs at 4%. To help do this the government has ordered utility EDF, which is 80% state owned, to sell more cheap nuclear power to rivals.

New measures announced since the Ukraine crisis – such as helping companies with the cost of higher gas and power bills – bring the total cost of the government package to €25 billion-€26 billion (£21 billion).

French energy regulator CRE said last month it was proposing a 3.89% increase in regulated electricity sales tariffs. The government has the ability to oppose the regulator’s proposed rate hike and set new tariffs at a lower level or reject them outright.

Germany

German workers and families will receive extra cash, cheaper petrol and cut-price public transport tickets to help them shoulder soaring power and heating costs.

Workers who pay income tax will receive a one-off energy price allowance of €300 (£253) as a supplement to their salaries. In addition, families will receive a one-time bonus of €100 (£84) euros per child, which doubles for low-income families.

Over the next few years, €12-13 billion (£10 billion) per year will be allocated to subsidize renovations to old buildings and installing more energy-efficient windows, doors and heaters.

However, German households will have to pay almost €500 (£421) more a year for gas after a levy was set to help utilities cover the cost of replacing Russian supplies.

The levy, introduced by Germany in a bid to help Uniper and other importers cope with soaring prices, will be imposed from October 1 and remain in place until April 2024.

Italy

Italy approved in early August a new aid package worth around €17 billion (£14billion) to help shield firms and families from surging energy costs and rising consumer prices.

The scheme, one of the last major acts by outgoing prime minister Mario Draghi before a national election next month, comes on top of €35 billion (£30 billion) budgeted since January to soften the impact of sky-high electricity, gas and petrol costs.

Reports suggest the government would extend a €200 (£169) bonus paid in July to low and middle-income Italians who did not previously receive it.

A cut in excise duties on fuel at the pump scheduled to expire on August 21 is set to be extended to September 20.

Italy is also promoting a cap on gas prices at a European level to help contain price spikes.

Spain

Spain has started to temporarily subsidize fossil fuel plants’ power costs in a bid to bring down high prices in the short term while keeping a longer-term focus on building renewable capacity. The system is due to be in place until May 31, 2023.

Spain also cut several taxes to reduce consumer bills.

Spain announced €16 billion (£13 billion) in direct aid and soft loans to help companies and households weather sky-high energy prices.

With reporting from Reuters.

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