Averting a looming energy bill crisis

We don’t really know what sort of impact that is going to have on students – partly because the national datasets that are out there that are produced by the likes of ONS or the Department for Work and Pensions almost always exclude students in halls, and usually fail to address the issues of being in a shared HMO or whether student loans count as “income”.

The assumption is that the Department for Education (and its equivalents around the UK) will be on top of the assessment as to whether this will be a problem for students. But despite being the department principally responsible for their financial support, in England DfE hasn’t looked at the income and expenditure of students since 2014.

Even if it was straightforward to assess the impacts on student households, there are complicating factors. For students living in the parental home, there will be a family squeeze that will hopefully get picked up in the analyses from the likes of the Resolution Foundation.

But for everyone else, there are problems. Plenty of students will suddenly have much much higher bills and no easy of covering them. Many will share bills with housemates in situations where not everyone can pay up for their share.

Some students in halls or HMOs might be on an “all inclusive” deal that turns out to have in it clauses that allow a landlord to levy extra charges if energy costs increase by a certain percentage. How many students are blissfully unaware that this could be a major problem in a few months time?

Others might be on an “all inclusive” deal where an increase in energy costs has to be borne by the landlord – but doing so might push that landlord into their own deep financial trouble, with other ramifications to consider as a result.

In either case, with most analyses agreeing that the crisis is set to continue beyond the next energy Price Cap review in October, you can bet your life that those increases will be passed on in rent for 2022-23.

So what can be done?

In its piece on the crisis today, the Resolution Foundation says that the optimum response would be one that is both universal (providing help to all) and progressive (providing additional support to those on lower incomes).

As such, in the absence of action via the benefits system, it says that the best way to ameliorate the impact of rising energy bills is a policy package expanding the Warm Homes Discount, temporarily moving environmental levy costs to general taxation, and spreading the cost of supplier failure over three years. This response, it says, would reduce the rise in fuel stress by two-thirds, corresponding to 2.7 million families.

Sadly, expanding the Warm Homes Discount isn’t a component that will automatically work for students. The “core group” consists of those who get the Guarantee Credit element of Pension Credit. The rest is decided by energy firms.

This all suggests to me that in the short term, we need a big injection of student hardship cash – even though, thanks to the shameful paucity of data that’s floating around, we won’t really know how and where to target it.

And for next academic year, we need both an increase in the amounts of maintenance that governments around the UK are prepared to grant or loan to students, to warn international students about likely costs next year, and to be careful about assuming that families on lower incomes can chip in additional “parental contribution” at precisely the time that the household’s core bills are on the up.

We’re going to need a government department to take responsibility for the problem in terms of students, rather than DfE and DWP (or a devolved nation and Westminster) tacitly pointing at each other while students sit in unheated homes.

We may well also need to reconsider that massive move online we have planned. Encouraging students to spend much more time in their student home might not just be a problem for their mental health – it will cost them a fortune too. It’s hardly as if student housing is known for being well insulated.

And if nothing else, those ready reckoner calculators that universities have on websites about living costs need to change – sharpish.