A federation of 48 trade unions representing 5.5 million workers across the UK has called on the government to introduce energy market reforms to make retail companies publicly owned.
The Trades Union Congress (TUC) has proposed a “pragmatic reshaping” of the UK’s energy market, to be more in line with other European countries which have already taken measures to weather the current energy crisis.
The set of proposals follows analysts’ estimates that the price cap could rise again in October by a further 51% so that average bills could pass £3,200 a year.
The TUC has urged the government to take the “Big Five” energy suppliers and other failing retailers into public ownership, at a similar cost, under £2.85 billion, to what the government already spent on keeping Bulb afloat.
According to the analysis, the Big Five are British Gas, E.ON, EDF, ScottishPower and OVO, which cover more than 70% of market share – Octopus has 10.7% of customers and all other suppliers are less than 5%.
The authors of the report note that the profitability of the “Big Five” historically relied heavily on a ‘loyalty penalty’ – customers who stayed with the same supplier year to year and never switch paid higher prices, the standard variable tariff.
This meant that the majority of households – including many of the most vulnerable and older households who did not switch suppliers regularly – overpaid for their energy.
The TUC plan suggests a publicly-owned energy retail system could deliver a social pricing structure that lets everyone afford the energy they need to cook, clean and stay warm.
The union has also called for a free band of energy for every household to cover basic lighting, heating and cooking needs like keeping the lights on, keeping warm, and running a fridge.
A social tariff capped at 5% of income should also be provided for low income households, the report suggests.
A BEIS spokesperson told ELN: “We continue to believe competition is the best driver of value and innovation in the energy market. Ofgem are already taking action to protect customers from poor service, and strengthen suppliers’ resilience against high and volatile energy prices.
“We recognise that global inflationary pressures are squeezing household finances and people are struggling. That’s why the government has introduced an extraordinary £37 billion to help households in these challenging times, including £1,200 each for 8 million of the most vulnerable households.”