Argus title : Scrap fuel meters so poor have a chance to reduce their bills
When I am cold, I put the heating on. If it becomes very chilly, I turn it up. Wincing at the thought of the fuel bills, and mindful of the environment, I keep it as low as I can, but I’m never uncomfortably cold.
Though my family curses the fuel companies for raising prices, we can bear the cost. However, many people cannot.
Familes or individuals are said to be living in ‘fuel poverty’ when 10% or more of their household income is spent on fuel for the home. It is estimated that half of these are pensioners and that every 1% increase in fuel prices forces another 40,000 households into fuel poverty.
According to recent figures from Energywatch there are now about 4.4 million of UK households in this situation, with just over 3 million in England alone. This means that one in six households is living in fuel poverty, the highest for almost a decade.
The Energywatch figures were published at the end of a week in which British Gas said it was increasing bills by 15%. Other companies are also increasing their charges – such as EDF Energy (gas up 13% and electricity by 8%) and Npower (gas 17% and electricity 13%). Two-thirds of British households will have to pay higher tariffs.
According to government figures, the last time there were as many fuel-poor households was in 1999 when the figure was 4.5 million. Numbers then fell until about 2005, when fuel poverty started increasing again.
The government funds the very fine Warm Front programme, which provides grants for poor and vulnerable households to heat their homes and make them more energy-efficient. Grants provide a package of insulation and heating improvements up to the value of £2,700 (or £4,000 if oil central heating is recommended). However, it is struggling to meet its 2010 targets and the Fuel Poverty Advisory Group, a government quango, reports £1.3bn is now needed – rather than the £800m which had previously had been budgeted.
In addition, people are beginning to realise that fine new boilers and central heating systems are of little use if a family cannot afford to run them. Far too many low income households are forced to turn off adequate light and heating systems in order to save money. However, due to poverty, many do not have the high quality winter clothing and bedding which they need to help combat the cold. Many lone parents and pensioners quietly stint on food in order to pay bills or feed the prepayment meter.
The dangers to health and safety are obvious. In such circumstances, there is increased risk of illness – and fire due to use of candles and occasionally open fires.
According to housing expert Roger Brocklehurst, who is an Independent Board Member for Brighton Housing Trust and Downland Housing Association, “Inadequately heated homes account for between 25,000 and 45,000 premature deaths each winter, which in the 21st century is nothing short of a scandal.”
In a recent report for the Conservative Bow Group, Tony Lodge has said: “The Government is officially committed to completely eradicating fuel poverty by 2018 but this is now regarded as unachievable as energy prices spiral upwards and the Government’s own mechanisms for combating fuel poverty such as the winter fuel payment have not been increased in line with prices.”
He adds: “Labour’s own budget to tackle this blight looks set to remain static or even face cuts, against the advice of its own Fuel Poverty Advisory Group.”
It is well known that advice agencies have seen a huge increase in inquiries from people seeking help with debt. What has not been so well publicised is that many seek help because they are seriously behind on gas and electricity payments. The Citizens Advice Bureau has revealed that the number of people seeking help for this reason rose by a third in 2006.
There are a number of possible reasons for higher prices. The official line from Ofgem is that they are caused by high oil prices, which strongly influence the gas price, and declining UK supplies (gas is now the main fuel used to generate electricity in the UK and so there is a direct knock-on effect on electricity prices).
However, if supply costs are being forced up, it’s difficult to understand why the energy companies should be enjoying such high profits, with little apparent attempt by Ofgem to curb them.
In any event, much of our gas comes from Norway and there is apparently no existing shortage in supply, neither there nor in Europe. There are concerns about the political stability and intentions of countries who may supply gas in the future, but this should not affect current pricing.
There has to be a suspicion that energy companies are keeping prices artificially high in order to maximise profits – and that politicians are letting them do it because they want us to accept nuclear energy as inevitable.
In March last year Alex Salmond, the leader of the Scottish National party, criticised the government for blaming European governments for the UK’s gas shortage. He said. “This argument doesn’t hold up to examination. The real culprit is the incompetence and short-sightedness of successive governments to secure supply and additional storage.”
He is probably right. Britain’s problems are exacerbated by the fact that the UK has only about eight days’ worth of gas in storage, much less than other European countries (France and Germany, for example, have over two months’ storage). Furthermore, the country’s biggest storage site, which contains 80% of Britain’s storage capacity, is still out of operation since a platform-fire a year ago.
In the meanwhile customers continue to suffer, with disproportionate suffering by those on low income who are forced to use prepayment meters. Not only do they pay more than those who can afford to pay quarterly or by direct debit, they are also precluded from shopping around for cheaper deals. Ofgem’s research shows that prepayment meter customers could save £250 million if they were able to change suppliers.
Roger Brocklehurst has pointed out that housing associations (also known as Registered Social Landlords or RSLs) accommodate some 5m people, many of whom are on prepayment meters. He notes that Ofgem’s own research indicates pre-payment meter customers could save £250M by switching supplier. He has proposed collective negotiation by RSLs on behalf of such tenants.
He says: “Given that so many of our customers are already suffering from fuel poverty, and with energy providers acknowledging that this is an issue through their offer of a range of social tariffs, why do we collectively not go out and negotiate one discounted tariff for all RSL residents and tenants?”
He adds “ This could include the best features of certain existing social tariffs, and ensure, for instance, that pre-payment meter tariffs were on a level footing with standard quarterly terms….At a stroke this could do away with the plethora of differing tariffs that our customers have to navigate their way through and if you don’t have access to a computer, you cannot take advantage of all those comparison websites.”
Brocklehurst suggests energetic pursuit of government proposals for housing developments to include Combined Heat and Power (CHP) schemes, with surplus energy being sold on to the national grid. He also suggests RSLs should look to set up a national Distribution Network Organization, to take the surplus power generated by all the CHP companies. This, he says, would both increase the RSL’s negotiating muscle and offer the possibility of “a social business with charitable objectives for the ultimate benefit of all our residents.”
Such imaginative thinking may point a way ahead which does not need to wait upon prior action by central government or Ofgem, but can be pursued independently.
Ultimately, however, the only real solution to these problems lies in proper state regulation of private companies, backed by real muscle – including a willingness to take them into public ownership if required.
Given that we have an official opposition still wedded to privatization and a government so fearful of nationalization that it cannot even get a grip of the Northern Rock Bank, I guess we’ll just have to whistle for that.