That even now, in 2011, families are forced to choose between whether to heat the home or eat a meal, is absurd and tragic in equal measure writes Olly Parker
Olly Parker is Events Director for the Fabian Society
That even now, in 2011, families are forced to choose between whether to heat the home or eat a meal, is absurd and tragic in equal measure.
New research released by The Institute for Fiscal Studies (pdf) shows how low-income households are forced to make that choice during periods of extremely cold weather.
On the day Scottish Power hiked gas prices by 19 per cent after its parent company, Iberdrola, announced a profit of £820 million in 2010, we need to re-open the debate about what the government should do to make sure that no one has to make that choice anymore, as well as suggest how the left can effectively campaign on the issue.
The last Labour government’s approach was benefit driven. For me the winter fuel allowance represents the good and bad in New Labour. It is a bold and truly popular doorstep policy that not even Osborne dares cut, but also a deeper symbol of how timid the last government became when it came to standing up against irresponsible capitalism by failing to create a real competitive market that would drive down the cost of gas and electricity.
We can’t simply continue to top up the benefits involved. Around £2 billion a year is given directly to households for the winter fuel payment, but as prices have risen by the amount the benefit gives out across the same period, the money is effectively further profit for energy companies.
A frequent excuse for price hikes is usually “uncertainty” in places like Libya (it used to be Iraq), but the link is almost an entirely spurious one. It is almost as ridiculous as saying that ‘there was no rain last week, so this week bread will be more expensive in Tesco’. Obviously there is some knock on effect, eventually, but there are hundreds of mitigating factors which take years to materialise, such as the long-term price contracts energy companies are locked into.
One solution, pushed in private by a growing number of business voices, is the need to truly split up the UK market by separating the different branches of extraction, transmission, distribution and retail. The lack of transparency around internal transfers and the ease with which large corporations can shift profits from one wing of the company to another is preventing the public from having the benefits of a truly competitive market.
Unlike mobile phones, where it’s perceived as relatively easy to move and companies put the effort into attracting and keeping customers, households rarely switch gas and electricity provider. The industry may call on people to “switch and save” but what’s the point when every UK provider put their prices up between 7 and 9 per cent last year within weeks of each other. You can expect the same to happen again with this announcement.
Last month, Will Hutton wrote very eloquently about the left making a case between good and bad capitalism. President Barack Obama is already doing the same in America. With Ed Miliband’s squeezed middle already feeling the pinch, this is one issue where we can use people’s real concerns about household bills to illustrate a wider point about Ed’s vision for the future of the Labour Party.
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21 Responses to “Westminster must take on energy giants to prevent fuel poverty”
Aaaaargh!
Seems to me there is a much wider issue – the prices of our food and energy are decided on the world exchanges, our energy companies just take advantage of that.
The very people/organisations who have brought the world economy to it’s knees are the ones who buy and sell our food and energy and you won’t see them going hungry.
Optimismsaturation
This call to pass the buck for energy policy on to market forces just sounds like shirking responsibility for the big decisions we’ve got to make about our society and its future.
Almost literally everyone’s attacking this shadowy ‘big business’ and ‘corporate power’ nowadays. When corporations are in fact now keen on handing away as much responsibility as possible by contracting out and calling in management consultants to tell them how to run their own business. The ‘evil corporate power’ stuff is more often than not a silly semi-conspiracy theory to cover up the inadequacy of both leftist and free-market ideology nowadays.
Really we should be challenging the trendy environmentalist luddites who attack economic development and power-generating technologies like nuclear and hydroelectric dams. They are the ones arguing for more expensive energy – effectively for giving less power to the poor and the vulnerable.
What we need is not yet another appeal to market forces, but to sort out a proper vision of a dynamic, developing, growing world with plenty of energy and goods for all.
Ed's Talking Balls
I agree, these businesses shouldn’t be allowed to profiteer this way. Putting fuel prices up well beyond inflation when people’s wealth is being eroded day by day is disgraceful and government should be doing something about it.
A non-means tested winter fuel allowance is completely the wrong way to address this issue; government must strike at the heart of these shameless, incessant price hikes. Failure to sort this is messing with people’s lives.
bill pearson
we must act to get a us out of fuel poverty write to your MP
reded
What about the millions of pounds being diverted into the pockets of wealthy landowners like Cameron’s Father in Law for the privilege of allowing us to put wind turbines on “their” land. Time to compulsorily purchase the land for a fraction of the market value in the national interest.