Energy Prices (Strictly NO referrals!)

[McPhee]

It's businesses I'm particularly worried about.

We work in this market and I've just been dealing with one where the wholesale price has increased by a factor of 13 from when their last contract was signed. Roughly looking at a year ahead wholesale increase from 5p per kWh to 65p. It's not sustainable, many businesses will simply go under.

Craziest thing is, the competitiveness (and therefore survival) of many businesses could be determined by random luck. If you signed a multi-year fixed agreement last year, you're laughing. If your fixed agreement is ending soon, you're in trouble.

Imagine two cafés on the same street. One locked in a three year deal last year. The other has just seen its fixed deal expire. The first has, say, a £15k/year energy bill, while the latter is having to stump up £75k. That's an extra £60k/year in costs, on top of all of the other rising costs. How on Earth does the second café remain competitive with the first?

 

[potatolord]

It won't be limited to industries that are considered discretionary, it'll be every industry across the UK. Very few will be able to swallow the kind of rises some are beginning to see.

If every household loses £2k a year on energy alone, the effect will be huge.

Discretionary spend will go first- nights out, takeaway (especially delivery), holidays.

I suspect the housing market will get hit early, too. Home improvements will get delayed. All of that means a hard time for trades like brickies and plasterers. That knocks onto lots of small businesses.

 

[HungryHippos]

Craziest thing is, the competitiveness (and therefore survival) of many businesses could be determined by random luck. If you signed a multi-year fixed agreement last year, you're laughing. If your fixed agreement is ending soon, you're in trouble.

Imagine two cafés on the same street. One locked in a three year deal last year. The other has just seen its fixed deal expire. The first has, say, a £15k/year energy bill, while the latter is having to stump up £75k. That's an extra £60k/year in costs, on top of all of the other rising costs. How on Earth does the second café remain competitive with the first?

At a time when a lot of people will want inflationary matching payrises as well.

 

[krooton]

If every household loses £2k a year on energy alone, the effect will be huge.

Discretionary spend will go first- nights out, takeaway (especially delivery), holidays.

I suspect the housing market will get hit early, too. Home improvements will get delayed. All of that means a hard time for trades like brickies and plasterers. That knocks onto lots of small businesses.

Interestingly, I just read some research the other day that people are still prioritising holidays, and are choosing to cut things like eating out and new clothes instead.

The theory is that lock-down made the already holiday-crazy British even moreso, and as such many are saying it will be their primary focus for any 'discretionary' spending.

 

[SixTwoSix]

Wonder if a lot of businesses will push for people to WFH again, if they can ?

While my job could have been 95% WFH, my work insisted I was in all the way through pandemic - while others in similar roles with another manager had WFH entirely and now have a hybridised 2 in, 3 at home pattern. I still come in 5 days a week.

That said, i'm only a few miles up the road and like the separation from home/work so don't actually mind being in. I feel my workplace will soon decide myself and colleagues in same department are suddenly eligible for WFH and try to encourage it, not sure how i'd feel about that should the occasion arise.

 

[n111ck]

The cap will apparently cost 100 billion so they're not keen on that. I expect some (not enough) targeted support for the poorest, and everyone else will just have to struggle on.

It makes sense for individuals that are not 'poor' but cant afford it to take on debt to pay off over 1 to 2 years rather than the government taking on £100bn in debt for everyone (including those that can afford it) and paying billions in interest over 20 years or more. Maybe if we didn't have all the covid debt too but we do..

 

[Uther]

While my job could have been 95% WFH, my work insisted I was in all the way through pandemic - while others in similar roles with another manager had WFH entirely and now have a hybridised 2 in, 3 at home pattern. I still come in 5 days a week.

That said, i'm only a few miles up the road and like the separation from home/work so don't actually mind being in. I feel my workplace will soon decide myself and colleagues in same department are suddenly eligible for WFH and try to encourage it, not sure how i'd feel about that should the occasion arise.

It would put the costs on to you rather than them so I suppose they might like that. Not sure if or what WFH people can claim.

 

[HungryHippos]

It would put the costs on to you rather than them so I suppose they might like that. Not sure if or what WFH people can claim.

Nothing if it's optional. Not much if it isn't.

 

[413x]

Interestingly, I just read some research the other day that people are still prioritising holidays, and are choosing to cut things like eating out and new clothes instead.

The theory is that lock-down made the already holiday-crazy British even moreso, and as such many are saying it will be their primary focus for any 'discretionary' spending.

This is me to a tee.

I will cut everything before I cut holidays.
Everything else is material or not worth the money

 

[SixTwoSix]

It would put the costs on to you rather than them so I suppose they might like that. Not sure if or what WFH people can claim.

I guess on principal i'd want to say no as I wasn't even given the option for the last few years, I was apparently 'needed' in every day. The few times I had mild covid symptoms, i was allowed to WFH for those weeks however.

On the other hand, I like having a job and don't particularly want to rock the boat, however WFH means my electric/gas at my cost - the next few weeks/months will tell I guess.

 

[McPhee]

Interestingly, I just read some research the other day that people are still prioritising holidays, and are choosing to cut things like eating out and new clothes instead.

The theory is that lock-down made the already holiday-crazy British even moreso, and as such many are saying it will be their primary focus for any 'discretionary' spending.

Makes sense to me TBH. Easier to tolerate cut backs if there's something to look forward to.

 

[robgmun]

The cap will apparently cost 100 billion so they're not keen on that. I expect some (not enough) targeted support for the poorest, and everyone else will just have to struggle on.

That would kill the Tories in the next election. Seeing those on benefits get yet another handout while middle-income (and I'm talking average wage of £28k here) just sit and watch on, and get into debt/overdrafts to pay these backbreaking prices would just inflame the voters. The "what about us?" chorus is getting louder everywhere I look on the internet.

I suspect they'll just double the £400 to £800 and leave it as that. Which will help but not enough.

I just spent the last weekend combing through our house to find energy vampires using a watt meter I just bought and it's been a real eye opener. I swapped a lot of lighting to LED with little or no difference in the amount or quality of light. My old halogen uplighter was drawing between 60w - 220w depending on how dim I had it and I had it on for the whole night. Replaced it with an LED version that gives the same light (and even comes with a remote control!) and only draws a max of 20w, I usually have it dim so it draws 7-10w. That's just one example but also bought a butch of "standby be gone" smart plugs to stop by amp/speakers drawing 130w on standby.

 

[ltron]

Even Nixon did price controls in the 1970s to try to tame inflation, I think whoever is in charge will be forced into similar radical action.

 

[Ahleckz]

That would kill the Tories in the next election. Seeing those on benefits get yet another handout while middle-income (and I'm talking average wage of £28k here) just sit and watch on, and get into debt/overdrafts to pay these backbreaking prices would just inflame the voters. The "what about us?" chorus is getting louder everywhere I look on the internet.

I suspect they'll just double the £400 to £800 and leave it as that. Which will help but not enough.

I just spent the last weekend combing through our house to find energy vampires using a watt meter I just bought and it's been a real eye opener. I swapped a lot of lighting to LED with little or no difference in the amount or quality of light. My old halogen uplighter was drawing between 60w - 220w depending on how dim I had it and I had it on for the whole night. Replaced it with an LED version that gives the same light (and even comes with a remote control!) and only draws a max of 20w, I usually have it dim so it draws 7-10w. That's just one example but also bought a butch of "standby be gone" smart plugs to stop by amp/speakers drawing 130w on standby.

You going to put that watt meter on the MM now you don’t need it?

 

[MadMossy]

If every household loses £2k a year on energy alone, the effect will be huge.

Discretionary spend will go first- nights out, takeaway (especially delivery), holidays.

I suspect the housing market will get hit early, too. Home improvements will get delayed. All of that means a hard time for trades like brickies and plasterers. That knocks onto lots of small businesses.

I'd hazard to guess the housing market has already taken a hit, certainly the rental sector, there's a property up for rent near me, usually they get snapped up due to location and views, but this time its just sat there, been on the market for 3 weeks. I've not seen a single person come to view it, partly because I think the rent is way too high even the landlord agreed it was too much but that's what the agent said it should be.

 

[robgmun]

You going to put that watt meter on the MM now you don’t need it?

You can get it for £13 from amazon

I don't think I'm done with it by a long shot, there's lots of tweaking that can be done

 

[Haggisman]

It makes sense for individuals that are not 'poor' but cant afford it to take on debt to pay off over 1 to 2 years

No. That would be a terrible idea as it's based on the assumption that the costs are actually* going to go down - if they don't then not only are these people still paying the higher prices that they can't afford, they are also paying back the debt.

* I'm aware they are predicted to drop slightly after April, but that's a long way in the future - it remains to be seen if that really happens.

 

[n111ck]

No. That would be a terrible idea as it's based on the assumption that the costs are actually* going to go down - if they don't then not only are these people still paying the higher prices that they can't afford, they are also paying back the debt.

* I'm aware they are predicted to drop slightly after April, but that's a long way in the future - it remains to be seen if that really happens.

But the £100bn is based on a fixed amount of time too - 6 or 12 months - so do we then spend another £100bn if it doesn’t come down?

Also the public needs to understand how expensive energy is and price caps just hide that..

There is no solution that provides a permanent fix.

 

[Haggisman]

the public needs to understand how expensive energy is and price caps just hide that..

There is no solution that provides a permanent fix.

I agree completely - I just think that advising people to borrow money to pay an ongoing bill which they can't afford is a very dangerous thing to suggest

 

[MatsyLR]

I agree completely - I just think that advising people to borrow money to pay an ongoing bill which they can't afford is a very dangerous thing to suggest

Get in debt to pay a debt, smart way of doing things!