Call to prevent power cuts in poorest German households

More than 340,000 electricity customers across Germany have their power cut off each year for failing to pay bills. A new proposal from one political party aims to change this.

Call to prevent power cuts in poorest German households
Energy poverty is an increasing problem in Germany. Image: DPA

Figures from 2017 show that there were 343,865 cases of people having their electricity shut down off due to not paying a bill, an increase of 14,000 from the previous year.

The average amount owed in these instances was €117, highlighting how close many German individuals and families are to the breadline. 

A total of 6.6 million warning letters are sent on average each year, of which 1.2 million power blocking orders are sent. The figures indicate that just under one third of those blocking orders results in a power cut. 

Poverty has been on the rise in Germany in recent years. A 2017 study showed that approximately 13.4 million people in Germany live in poverty or are considered at risk of poverty, representing roughly 16 percent of the population. 

A proposal from the left-wing Greens party hopes to change this by putting in place an ‘electricity cost allowance’, an amount that would be paid in addition to the current Hartz IV (German social welfare) rate. 

‘Energy poverty’

While having a phone or internet connection cut off is likely to be inconvenient, losing access to basic utilities can be significantly problematic – particularly in the harsh German winter. 

The Süddeutsche Zeitung, citing a proposal drawn up by the Greens, reported that tens of thousands of Germans frequently go without power. The Greens want to avoid a situation where German families cannot heat their apartments or cook food. 

The proposal would also eliminate the costs associated with sending reminders and for blocking and unblocking an electricity account. 

Electricity bills are rising in cost. Image: DPA

Lower-income Germans the most affected

Sven Lehmann, a spokesperson for the party, told the Süddeutsche Zeitung that the changes were necessary to address electricity price hikes and cost of living increases.

“About half of the total power cuts are for people receiving social help,” he said. 

“Since the introduction of Hartz IV, electricity costs have risen more than the standard costs of electricity.”

The electricity cost allowance would be paid in addition to the current Hartz IV rate. Where a household starts to enter debt due to rising electricity costs, a scheme would be developed to allow them to repay the amount without incurring further debt.

The proposal also included funding for lower income households to upgrade from their current appliances to newer ones which use less energy. 

Many of these households already struggle to meet their existing financial obligations, meaning upgrading and improving appliances is impossible. 

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“Electricity shut offs can be prevented,” Lehmann said. 

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German cabinet agrees record levels of new debt for 2021

The German government agreed Wednesday to take on record borrowing this year to weather the economic blow of the coronavirus pandemic.

German cabinet agrees record levels of new debt for 2021
Finance Minister Olaf Scholz. credit: dpa | Kay Nietfeld

In budget adjustments signed off by Chancellor Angela Merkel’s cabinet, Europe’s largest economy will borrow a total €240.2 billion in 2021, a third more than initially planned.

The adjusted budget, which will see Berlin break its taboo on new debt for the third year in a row, still has to be approved by parliament.

“We have decided to suspend the debt brake once again, and I think that’s justified,” Merkel told the Bundestag lower house, adding that the budget was “measured” despite “more insecurity” than usual.

“We are taking the right measures to manage the economic and financial effects of the pandemic,” added Finance Minister Olaf Scholz.

After maintaining a budget surplus for the last decade, the economic slump caused by the pandemic has forced Berlin to take on €370 billion in new debt in 2020 and 2021, with an extra €85.1 billion planned for 2022.

With the country facing a dangerous third wave and shutdown measures extended into April, Germany’s recovery has proved slower than expected this year.

Having originally planned to halt borrowing in 2022, the government is now aiming to return to its golden rule of fiscal discipline a year later, with only €8.3 billion of new debt in 2023.

The so-called “debt brake” is a rule enshrined in the constitution which forbids the government from borrowing more than 0.35 percent of gross domestic product (GDP) in a year.

READ ALSO: Merkel admits Easter coronavirus shutdown plan her ‘mistake alone’

Germany smashed the taboo in 2020 and 2021 as it scrambled to shield businesses and workers from the economic hit of the coronavirus.

The state has already paid out more than 114 billion euros of financial support to businesses since the beginning of the pandemic in the form of guaranteed loans, direct aid and shorter-hours work schemes.

Yet according to a report published by the German Economic Institute on Wednesday, the crisis has still cost the German economy 250 billion euros so far.

Extended restrictions

Hopes of a recovery this year have been dashed with entire sectors of the economy idled for months and the government revising down its 2021 growth forecast to three percent in January.

As a third wave of the pandemic tears through Europe, Germany extended shutdown measures by another several weeks at a marathon meeting between Merkel and state premiers on Monday.

Though plans for a strict five-day lockdown over Easter were scrapped Wednesday, businesses such as non-essential shops, leisure facilities and cultural venues will still remain largely closed until at least April 18.

In a report published Monday, the Bundesbank central bank predicted that restrictions would see economic output “contract markedly” in the first quarter of 2021.

The measures have also been met with growing frustration from business organisations, with the German Commerce Association warning that 120,000 shops could be forced to close if the measures continue to drag on.

The issue of taking on new debt, meanwhile, has also sparked heated political debate ahead of a September general election.

In January, Merkel’s chief of staff Helge Braun caused a major ruckus within his own CDU party when he suggested that the rule on fiscal discipline should be lifted for several years to come.

SEE ALSO: ‘We have finances well under control’: Germany takes on less debt than expected in 2020