I HAVE done a number of media interviews over the last week, and they all suggest that the message I have been trying to impart about the cost-of-living crisis is beginning to get through to some journalists. When I was asked by a BBC reporter “Can our economy survive the crisis that is coming?” I really thought that at long last the scale of the problem that we are facing had begun to be understood. But, of course, my answer did not get on air.

Nonetheless, I am both relieved and simultaneously terrified (as are those I am talking to) that people are realising that the cost-of-living crisis is not now just about how each of the millions of households in Scotland might make ends meet, but is also about how our whole economy might still work when those same millions cannot afford to pay their bills.

Let me put this in context. A year ago, the average UK household energy bill was about £1200 a year. Come January 2023 it is now expected to be about £4200 a year.

The average after-tax earnings of the lowest earning fifth of households across the UK as a whole was £14,550 last year. Assuming a five per cent increase by January 2023 (and that will not be true for everyone) that will be £15,278 next year.

Relating this to average energy bills, last year that meant that these households spent an average of 7p in every pound they had available to them on energy bills. By January 2023 that might increase to 24p in every pound of income. Overall, that will be an increase of about £2700, and I assuming when saying this that lower-income households use less energy than average, which is likely to be true.

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After the cost of inflation in food, rents and mortgage costs (for those who have them) are taken into account, the likely increase in the cost of living for the hardest up in our communities could approach £4000 a year. Candidly, there is not a hope that they will be able to afford this, even with the support now on offer from the government, which was designed to help with energy bills rising to £2800 a year, which is now more than £1400 less than expected.

And let’s also not pretend that this is only going to impact the lowest income households. Households with average pay have, on average, after tax income of about £31,383 to spend a year. But the increase in energy bills, for which they might get only £400 of government support, is going to absorb up to £3000 of this. Many of these households, will after inflation in other unavoidable costs, be in as much trouble as any of the households in the lowest twenty per cent of income earners.

Even those on highest incomes - and the largest energy bills - will moan, but for them I estimate that bills will only increase by about £3300. They will by January 2023 be spending 7% of their disposable income on energy when only a year or so ago they were spending less than 2% on energy. They, unlike the bottom sixty percent of households, might avoid energy poverty as a result, given that it is defined as sending ten per cent or more of your income on energy. But they need to think hard about what this means. If they were to pay energy bills as proportionately big as those in the lowest twenty per cent of households ranked by income then this highest earning group would be paying more than £7500 a year for their energy. You can hear the screams that would create.

For the record, I am not suggesting that we should have energy bills of that size for anyone. But the point I am making is that there is nothing fair about energy price inflation when it is going to penalise the lowest earning in our society to the extent that it is going to do.

So, what can be done about this? I have three obvious suggestions.

First, the government must increase the money available for support for energy bills and extend the payments it makes to many more households. Approximately £15 billion has been made available to date, but bills are likely to go up by £80 billion in total. The help on offer is clearly inadequate. It will need to exceed £40 billion, at least and be well targeted.

What will happen when households can not afford to pay their bills?

Second, the Government has to create an emergency insolvency arrangement for those who, despite support, still cannot make the payments that they owe. We need a simple state-led mechanism to protect people from their creditors when the inability of many households to pay all their bills has arisen through no fault of their own. Unless we do this, millions will still be saddled with mountains of debt when this immediate crisis is over and that will make any recovery from the recession we’re now in very hard indeed, so this protection against creditors is vital now.

And third, businesses requiring support (and many will, from energy companies whose business model is failing, to lots of leisure, hospitality and retail businesses) must be given support, but this must be much better controlled than in the Covid crisis, and large percentage ownership stakes must be taken in any business needing help so that the long term upside from this spending will be secured for the benefit of everyone in the country.

The crisis we are facing is immense, but sensible spending, sensitive support for those in stress and help for businesses to ensure that they can continue to employ people so that a deep economic recession can be avoided is vital. The question is, will either Tory leadership candidate deliver anything close to that?