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.
21 Responses to “Westminster must take on energy giants to prevent fuel poverty”
mr. Sensible
There are things households can do, like insulation and using alternative sources of energy, but we do need to get a grip on energy companies profiteering in this way.
Leon Wolfson
Mr. Sensible – Only if they own the home, typically. Improvements need a landlord’s permission, usually, and they rarely give it. Ours has refused to allow us to solve a draft problem where I live, for example.
Energy policy should focus on affordability as a major criteria, which it simply isn’t currently. We may need to shut off the electricity here over the next winter if prices rise any higher, because again the landlord insists we have to use an meter – pushing prices even higher.
That’s going to halt the work I do from home, and limit my work for Universities.
Nuclear Power is low-carbon AND affordable, compared to wind farms which can even TAKE energy to run at cold peak times!
jkolmmurray
Prices are going up because the cost of producing energy is going up and developing economies are using a lot more of it to make stuff, largely for people in the west. No amount of jiggery-pokery in the market takes away from those facts. The uninformed should stop obsessing over supply and concentrate on reducing demand. A meaningful and effective domestic energy efficiency programme (not the Green Deal) would go a long way to reducing fuel poverty than changing the way we generate electricity, particularly since most energy use in the home is for heating, largely using gas. Using electricity as a heating fuel is foolish given generation, transmission and distribution losses.
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[…] his proposal will end up seeming timid given the seriousness of rising energy costs. In a recent article for Left Foot Forward, Olly Parker highlighted the impact of rising fuel bills on low-income […]
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