Are “Payment Strikes” About to Become a Regular Feature of the Economic Landscape?

The reemergence of “payment strikes” is perhaps a sign that as economic conditions deteriorate, people will begin to leverage the only real power they have left in today’s hyper-consumerist societies — i.e., as consumers. 

In 1990, British people did the most unBritish of things — they revolted en masse against a deeply unpopular government policy. Across the country, beginning in Scotland, hundreds of thousands of people rioted against the Thatcher government’s poll tax, which was levied as a fixed sum on every liable individual, regardless of income, resources or ability to pay. Households covering almost a third of the British population initially refused to pay the tax even though such an act could lead to prosecution. It was the largest payment strike of modern British history and ultimately sowed the seeds of Margaret Thatcher’s downfall.

Now, the UK may be about to see another, albeit very different, mass payment strike. In response to runaway energy price rises, a seemingly grassroots movement called Don’t Pay UK, modelling itself on the poll tax resistance, has called on one million of the UK’s 28 million electricity consumers to boycott the energy companies this Fall. Formed in June, the campaign has already gathered over 110,000 pledges not to pay energy bills after October 1, unless the government and large energy companies reduce bills to an affordable level.

The goal of Don’t Pay UK is simple, says the campaign’s website:

We are demanding a reduction of energy bills to an affordable level. Our leverage is that we will gather a million people to pledge not to pay if the government goes ahead with another massive hike on October 1st.

Mass non-payment is not a new idea, it happened in the UK in the late 80s and 90s, when more than 17 million people refused to pay the Poll Tax – helping bring down the government and reversing its harshest measures.

Even if a fraction of those of us who are paying by direct debit stop our payments, it will be enough to put energy companies in serious trouble, and they know this.

We want to bring them to the table and force them to end this crisis.

Even by European standards, energy prices have soared for British households over the past year. In April, the UK’s Office of Gas and Electricity Markets (Ofgem)– tasked with overseeing the country’s privatized grid — hiked its price cap on energy bills (the maximum amount energy suppliers can charge each year) by 54% to £1,971. The next price cap, for October, is due to be published this Friday. Energy market intelligence consultancy Cornwall Insight has forecast it could rise by as much as 70%, taking the cap to an estimated £3,582 a year for a typical home.

From October, the price caps will change every three months instead of every six, opening the way to more regular price rises in the future. Ofgem may raise the price cap to £4,266 in January, says Cornwall Insight and to over £5,000 in April, according to Citi’s estimates.

That would represent a more than four-fold increase in energy bills in the space of just one year, at a time when most people — particularly those at the lower levels of the income scale — have seen their real salaries fall sharply. To make matters worse, as the British chartered accountant and political economist Richard Murphy notes in a piece for The Scotsman, the burden of the price rises will fall disproportionately on lower income households:

Whilst the top 20 per cent might see [energy] inflation of about seven per cent in the UK, those in the lowest twenty per cent of income earners could experience energy inflation of around 16 per cent, in the IMF’s estimation…

But why has the price for those on low incomes increased so disproportionately?

First, many in this group are forced onto pre-paid meters. Second, these have the worst tariffs. And third, the standing charges for simply having any meter in your house are disproportionately high for those on low incomes because, relatively, they consume less energy, and those standing charges have increased considerably.

There is plenty that both the government and Ofgem could do to relieve the pressure on the most vulnerable households if they wanted to, says Murphy, including scrapping the standing charge and including it in the tariff, making charges progressive to ensure that the more energy a household consumes the more they proportionately pay for that energy, and requiring that pre-paid users, who are normally on the lowest incomes, pay the lowest tariffs.

But none of these are likely to happen. Despite the gravity of the situation, with as many as two-thirds of British families and over 85% of pensioners expected to slip into fuel poverty – where at least 10% of net income is spent on fuel – by January, there is still no meaningful help on offer from the UK’s rudderless government. At the same time, many of the UK’s largest energy companies are recording bumper profits.

But hard-up consumers may end up taking matters into their own hands…

Read the full article on Naked Capitalism

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