This comes from 'Surviving 2023', which I published yesterday. In this section, from Chapter 1, I imagine what will happen if the government does not intervene in the economy to the scale required to deal not just with the household bill crisis, but the crisis that every other sector of the economy faces. It is deeply worrying that no politician seems to understand this as yet:
It is, of course, impossible to predict the future with certainty. But, such is the scale of the current energy price crisis that some things are reasonably predictable.
First, large numbers of UK households are very unlikely to be able to pay their bills as the winter of 2022/23 develops. How many cannot be known for sure, but given that we know most households on average and lower incomes have very few cash savings it is likely that the number who will struggle might exceed 10 million households and could easily reach 15 million homes.
These households will not only have problems with energy bills though. If they try to keep paying for electricity and gas in they will simply shift the problems that they face elsewhere. They will also struggle with water bills, council tax, broadband and phone costs, mortgage and rent payments, car loans and other debt payments, like credit cards.
Talking of credit cards, these will soon be maxed out, as will be overdrafts. The pawn shops will be very busy this winter, feeding off misery as they always do.
So what we face is a very rapidly developing household debt crisis, which none of those involved will have had to experience through any fault of their own.
The immediate consequence will be seen in increased demand for support services. Food banks will be busy, and probably overwhelmed. So too will the NHS as people cannot cope because, for example, they are unable to afford adequate home heating. My suspicion is that the real crisis will arrive in January. People will struggle on until then, with the desperate desire to have a normal Christmas. Then the debts will really hit.
This pattern always happens every January, but in 2023 this is going to be different. Very large numbers of people will no longer be going out. The hospitality and leisure sectors will be hit, massively, as people simply stop spending money that they have not got. This will also hit a lot of retail business too. The inevitable consequence of that will be a rise in business failures, and increasing unemployment. A serious economic recession is very likely as a result.
But there are also going to be big impacts on those who are not going to be paid what they are owed. Energy companies are going to be bogged down with millions of accounts that will be failing or in dispute. They will not have the staff to deal with this. Some of these companies will try to cut people off as a result. Amazingly, and unlike water companies, they can do this. But the consequences will be severe. People will lose access to heat, light, the ability to cook, access to the internet, their phones, entertainment and more. Lives will be put on hold. Worse, lives will quite literally be put at risk. People will die.
This won't save the energy companies though. They might send the bills out for energy people can't afford to pay for in 2023, but the payments will not come back to them in anything like the sums they might expect because people will be unable to pay through no fault of their own.
And, as we saw in 2021, energy companies can, and do, fail. The actual producers of oil and gas will not. Maybe the electricity generators might not (but it's harder to be sure) but those who actually sell us the energy that comes into our houses can fail. And they are going to do so. This is inevitable. You cannot try to sell most of your product to people who cannot pay for it and expect to stay in business. That just cannot happen. In that case it is not just consumers who should be panicking about the forecast price increases: all of the domestic energy companies should be too. They are at extreme risk in the situation that is developing.
The energy companies will not be the only businesses in trouble though. The water companies will be threatened. When people realise that water can't be cut off water bills will go unpaid at a phenomenal rate. The whole business model of the water companies is likely to fail.
Landlords might also be going unpaid. Expect attempts at eviction to skyrocket in 2023. Many will succeed. We are likely to have a homelessness crisis due to energy price increases.
Banks will also have a big problem with mortgage arrears, which could be very costly for them. It takes time for them to repossess, but don't doubt that their attempts to recover homes will be a big issue in 2023 as things stand right now. The situation will be made worse by the fact that when the banks try to sell the houses they can no longer make money from house prices are likely to fall, because few will be able to buy, or will want to. That could then trigger a banking crisis since more than 80% of most banks' lending is secured on property, and if its value falls banks make losses as night follows day.
What other activities will be in trouble? No one knows how schools will pay their energy bills in 2023, which are not capped, and which have not been discussed by any politician as yet. Will they have to send children home? And what is the impact of that in the economy?
Similarly, hospitals are already in trouble. Fuel costs will just make everything worse. The chance that effective health care can be provided in what could be the worst-case scenario of cold buildings without power is close to zero.
The social care situation may be even worse. Already at breaking point with staff problems, fuel costs will make many, and maybe most, care homes unprofitable. But who then will care for those living there? Or will they be abandoned?
And I stress none of this is catastrophising. I wish it was, but all if it is a simple and reasonable extrapolation of the issues that are likely to arise as we head through the winter of 2022 and into 2023.
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Commentators regularly describe the situation real people are going to find themselves in in the coming days as, “people will have to choose between heat, light and food”. But what if the situation is so bad that people can’t afford any of the above? What happens then?
They die
And the Tories will not care
Some people might despair and curl up and die. But many, faced with cold dark homes and hungry children, will not take it lying down. I don’t know which direction this will take – perhaps rent strikes and “can’t pay, won’t pay” on utility bills. Perhaps civil disorder.
I hope in Whitehall someone is giving some serious thought to what can be done in school and hospitals and care home and all other necessary non-domestic elements of civil society. A few hundred quid toward some household bills really is not going to scratch the surface.
Just a thought: how much of this pain is being inflicted by Russia as a form of economic warfare, to reduce our will (not just in the UK but across Europe and elsewhere) to support Ukraine? Might we need to move to a wartime footing?
We might….
I guess my suggestions are the start of that
They riot. They’ll have nothing to lose. I imagine the first sign of impending disaster will be groups of people ‘steaming’, robbing supermarkets by steaming into them mob-handed and looting them. I fully expect the many farms who sell online to have to stop due to crowds mobbing courier vans as they leave with orders for distribution. When obeying the law leads to consequences far worse than disobeying it, like dying, social breakdown and general civil disorder has to be expected.
Again, I find myself wondering about the motivations behind the government’s and opposition’s refusal to act with any measure of alacrity or consider the most obvious and workable solutions. Is it genuinely the case that most MPs are so disconnected from people’s lived realities that they are unable to comprehend the imminent danger? Are they so welded to their political dogma that they cannot and will not accept that they are continuing to use a failed system? I openly admit that I am baffled and alarmed by the behaviour of our politicians: Labour is telling us that we should pay a sizeable amount of money to have others kick the can a short way down the road for us, while the Tories are claiming that the can will somehow magically kick itself.
So far, I’ve only been able to conclude that we are either at the mercy of truly sinister intentions or dealing with absolute incompetence. If anyone thinks they have a better take on the situation, I’d love to read it.
Chirs,
From my experience most MPs are well aware and their constituents tell them of what is going on.
But most MPs are not in government and cannot direct the civil service.
Most of the ruling party are not in government either.
Those who have posts, have power in their department- but they have to defer to the strategy of the Prime Minister and cabinet.
MPs can act to present the views of particular groups or individuals and can offer help to their own constituents -not others’. There are things they can do. Wilberforce was an MP but never We know about their views mainly through the media who select who they report and act as a filter. MPs with power get more attention.
They also have to follow the party line as you suggest-although there are exceptions but the danger is they remain back benchers. They also have constituency associations who like to tell them how they should carry out their role.
I have come to the conclusion that real power lies outside Parliament- in the world outlined in the film ‘The Spider’s web’ -about the network of banks, Establishment institutions and tax havens and despite falling circulations, the billionaire owned newspapers and the patronage power of appointments. It also lies in the party donors such as rich individuals, trade unions, and businesses.
Parliament has the power to modify or change this – reform of the Upper Chamber, of the powers of the Head of State, the electoral system. It could do so given the will but those who have power or think they might have power in the future, are very reluctant to change.
In my former life as a counsellor I saw people become willing and able to change
1) when they can see a way they didn’t before
2) they are in a crisis and the situation can’t go back to what it was
3) they are attracted to a new way of life
for institutions it is much the same except it usually takes the departure or death of the Old Guard Leadership.
I am sure there are sinister intentions (but it depends on what seems sinister -MMT probably seems that way to the Bankers ) and lots of incompetence. And lots pf personal ambition which does not have the common good in mind-as is the case with Boris Johnson.
But there is always hope. This crisis may well clear the way for for a new paradigm.
That is why Richard’s document yesterday, the movement for MMT , the growing PR voting movement, the Green movement and so on are important. And our own small contributions multiplied by the millions of us.
How will foodbanks still exist, dependant as they are on charity which will surely dry up?
I added a one-liner on that in the report when i realised the likelihood of this
I heard about a foodbank in South London having to close its doors already. Then I read this.
https://latestpagenews.com/news/overwhelmed-food-banks-turning-people-away-after-they-run-out-of-food/
A glimmer of good news, albeit from across the pond.
https://twitter.com/debatehazel/status/1559107110662807557?s=21&t=9PHwa0MFVgL47ukKSYVWoA
I saw it
If only here…..
I found Rees-Mogg’s statement on QE quite amazing. Perhaps we are at the beginning of a new road
http://www.progressivepulse.org/economics/probably-the-most-important-sentence-mogg-has-ever-uttered
Right around the time that politicians / policymakers understand there is no shortage of money, we’re discovering the real constraint is the availability of useful energy. Steve Keen and Robert Ayres are the only economists I’ve come across who are grasping this.
https://www.amazon.co.uk/Not-Money-Alone-Economics-Intended/dp/1897766726
https://www.amazon.co.uk/Economic-Growth-Engine-Prosperity-International/dp/1849804354
They will have to take emergency powers.
Do you think they will give them back?
They never do
Great post Richard – making us consider the unpalatable consequences we might be facing.
You know, looking back from Thatcher to Blair and even now, politicians with their ‘press secretaries’ and other mouthpieces have got too used to controlling and shaping narratives and using PR rather than just straight forward communication with the public.
The simple fact is that they are unable (most of them) to speak honestly because of course it is all about containment and hiding the agendas of those who fund them into power.
The CoLC however may be one of those issues that they lose total control of and of course they will over -estimate their ability to contain it.
Socialist solutions required…and by that I mean an understanding that in a developing society , the fundamentals should be a given. Housing, energy ,water, food, education and healthcare should be available to all…and that if the UK or any nation is genuinely a nation then that means something…it means we welcome and nurture our citizens, not use them as low paid minions with ever decreasing standards of living, but make decisions that are progressive and dare I use the word…caring!
Shall we stick to reality?
Are you saying that long term these are not goals? Do you not think that tinkering around the edges with a system that has got us here is not enough? Your initial assertions lead to only a few outcomes…more cooperation or destruction! Do you not see that? Thanks for your informed response by the way!
Sorry, but given what I see when I moderate comments (which excludes what you are replying to) I don’t follow this
Basic needs being met are a human right. The English government are about to remove all human rights from the people across the UK.
The cost of greed crisis is deliberate. There are some extremely sinister forces behind those in power in Westminster, their agenda to install a totally authoritarian system is utterly terrifying. People will turn on each other, a win win for the oligarchs.
David Byrne says
As previously observed, the unequal 1-10% (including our government and their sponsors) do not care.
They hope to use ‘The Philip Green Economic Model’:grab as much cash as possible (whoever it may belong to), and, avoiding use of sinking ship transport, depart for Monaco, a place of peace and tranquility where civil unrest is not part of the vocabulaire.
Erm, because they’re the cause of it?