The price is too high for Cameron's £50 roll back

 

December 3, 2013

David Cameron has rolled over, rolled back and let the energy companies tickle his tummy. It is not a pleasant picture.

Within hours of the government’s announcement that it was cutting the ‘social charges’ added to domestic energy bills, several of the suppliers announced a reduction or freeze in their charges to customers. Job done. The government gives itself lots of brownie points for helping ‘hard working families’ and we all move on to the next short-term political crusade.
It all goes to show that the ‘greenest government ever’ does not do energy policy. The measures announced this week will shave about £50 from the average fuel bill of £1,340. The rebate element of that saving is just £12. Small beer, big problem.
This government just makes up policy as it goes along – it hasn’t the slightest idea of investing in the long-term. If you cut, or scale back, measures designed to reduce energy consumption, the long-term effect is increasing energy use and, therefore, costs.
It is that obvious, yet our politicians don’t get it – or rather, choose to ignore it in favour of short-term political point scoring.
Labour is no better. Ed Miliband was once this country’s Energy Minister, but has announced a ‘policy’ to freeze energy prices if he wins the next election. The cost of that? Prices rose within weeks and potential investors in new energy infrastructure started to get cold feet.
Security
Our energy efficiency strategy is in tatters; we have no long-term energy security …and, as a result, consumers will be paying much, much higher bills in the future.
Look, nobody said going green would be easy. It is a huge shift in technology and user behaviour – and possibly the most significant change of direction since the industrial revolution. However, it simply has to be done – there is no alternative; even if you don’t believe in climate change. To control energy prices in the long-term we have to find alternatives to finite supplies of fossil fuels or make sure we use as a little as possible.
Yet, every time there is a tough decision to make our government bottles it. No-one is going to invest in renewables and energy efficiency in this country if the government just raises the white flag every time the going gets tough.
The irony is that ECO was actually working, unlike numerous other government initiatives I could mention. It was starting to make a difference to the energy performance of harder to treat homes and putting a small dent in fuel poverty. Now it will be watered down to save consumers just £30-£35 a year.
Of course, the energy companies moved swiftly to embrace this by announcing new pricing. They love it because they pay less in ECO and get to sell more energy. Drinks all round.
The risk in watering down ECO is breathtaking. The long-term impact on fuel poor homes could be devastating. This is short-termism at its very worst. People who have trouble heating their homes will be the ones who pay the highest price for this miniscule rebate because their properties will be wasting energy far into the future.
Fuel poverty
Also, tinkering with the definition of fuel poverty is fooling no-one. The government has managed to take 800,000 families out of fuel poverty simply by changing the method for calculating it – that does nothing at all to address the underlying problem.
Instead a series of ‘roll backs’ are quickly unravelling our energy security. The Green Deal has been hung out to dry and the Code for Sustainable Homes is being abolished as part of the Housing Standards Review. Shaving tiny amounts from consumers’ bills to win a few votes is a total abrogation of responsibility for the future energy security of this country.
None of these schemes are perfect, in fact, they are an administrative nightmare for both consumers and installers, but that is what you get when over complicate schemes in an attempt to remove all the risk and at least we have some schemes capable of delivering energy savings. They should be improved rather than just swept away on a political whim.
Grants
The £540m worth of grants announced alongside the ‘roll back’ also don’t add up. Grants of £1,000 will be available for home buyers to spend on energy saving measures over the next three years – expected to support work in around 60,000 homes a year i.e. 180,000 homes in total. There are 26 million houses in the UK.
A scheme for private landlords is expected to reach 15,000 of the least energy efficient properties and £90m will be spent on improving schools, hospitals and other public sector buildings.
This pales into insignificance beside the £16bn cost of the UK’s first nuclear power plant in 20 years at Hinkley Point. Although that is being paid for by private investment, EDF has negotiated a tariff double the current price of electricity to guarantee its return. So, the government won’t spend a few pounds on insulation and other energy saving measures, but is perfectly happy to mortgage consumers’ future energy prices against expensive nuclear power.
We will keep banging the drum for energy efficiency – as the most valuable fuel we have is the fuel we don’t use – but I fear the government isn’t listening and we are all going to pay a very high price.