/ Home & Energy

Cut down our energy bills George Osborne

George Osborne energy bills campaign

With millions worried about rising energy costs and suppliers being asked to justify price hikes, we’re calling on the Chancellor to stand up for consumers when he delivers his Autumn Statement on 4 December.

Dear Chancellor,

On 4 December, you will stand up in the House of Commons and deliver your Autumn Statement.

This is an opportunity to do two things that would help the almost eight in 10 people already worried about energy costs:

  • Cut the Big Six suppliers down to size to get more competition into the energy market, and
  • Cut the cost of government energy policies that we can’t afford.

Why act now?

Consumers have been left reeling by the recent round of inflation busting price hikes. Last week four in 10 told us they can’t reduce energy use any further as they have already cut down as much as they can. And three in 10 don’t know how they will afford to heat their homes this winter.

And British Gas told us that their price rise meant around only £2 a week extra, but the average household is only able to save just over double that – £5.20 per week – so that £2 halves what people can put away for a rainy day.

People need your help – and they need it now.

But to be clear, we don’t want to see any drop in the support for the fuel poor. We don’t want to see changes that continue to let suppliers off the hook. And we don’t want to see energy efficiency abandoned – it is too important for keeping costs under control in the long term.

So what can you do? You can use the Autumn Statement to:

Cut the Big Six down to size by:

  • Committing to separating energy generation from supply: wholesale costs are the biggest part of the eye-watering rises to energy bills that people have faced over the last ten years. The wholesale market must be made more competitive to help keep prices in check.
  • Ending the blank cheque for suppliers’ delivery of the Energy Companies Obligation (ECO): they must be held to account for their costs, as we estimate nearly £200m a year could be saved if they delivered more efficiently.

Cut the cost of government energy policies:

  • Re-targeting the Energy Company Obligation (ECO): too much is focussed on expensive measures. If the Carbon Savings Obligation prioritised low cost measures instead, it could save between £242m-£363m a year, help at least the same number of households and still meet its carbon targets.
  • Scrapping the carbon floor price: it is an unnecessary burden on consumers that does nothing to incentivise low carbon energy production and increases wholesale costs. This would take in the region of £1 billion off bills next year.
  • Halting the smart meter roll out: it is a £12bn luxury we cannot currently afford. We should pause for two years, put a cap on the costs and decide how to make the roll out as cost effective as possible. This would save almost £80m a year for two years.
  • Taking the Warm Home Discount off consumers’ bills: this could cut bills by over £290m a year.

When you stand up in the House of Commons I hope you will also be standing up for the millions of hard-pressed consumers who are grappling day-to-day with the realities of rising energy costs by cutting both the Big Six and the cost of government policies down to size.

Cut them down, George.


No removing Vat ?

Where would the loss in revenue come from instead?

Freezing MPs salaries for the next 5 years. Scrapping MPs expenses. (If you couldn’t get your work done from 9 to 5 in the private sector, you’d be expected to work until its done for free). Not buying several hundred TVs so civil servants could spend hours watching the cricket. Ban them from ringing the speaking clock, most PCs these days can link to an automatic time sync. I’m sure if had access to the governments expenditure I could find many more examples of waste.

I’m all for restraining public spending. However, the annual vat take from domestic energy a couple of years ago was £1.5 billion – probably approaching £2 billion now. That is what would need replacing from somewhere else. MPs costs won’t begin to make it up!

How about closing tax avoidance loopholes that multi nationals seem to be exploiting with ease?

Looks like scrapping MPs expenses will save more than I previously thought…

Some 340 MPs have used the parliamentary expenses system to recoup the cost of heating their second homes, according to the Sunday Mirror.

Bills costing more than £1,000 were submitted by 41 MPs, while 78 made claims for £500 in the 12 months up to March this year, its analysis found.

We are so not all in it together,

I agree with the ideas to “cut the cost of government energy policies” and in general agree with the sentiments expressed by Which in this article. However the appeal is obviously being made on the basis that the current Government actually cares about the way our bills have increased? Or at least are in touch enough to really understand what’s actually going on.

I think they will take minor steps, do things which will provide “sound bites” designed to better their chances of re-election rather than really do something about our badly broken energy market.

Remember every increase in price we pay means more VAT collected, they like that and are unlikely to want to cut that treasury income. The well being of our bank balances, and even the health of the poor, are it seems to me very secondary considerations.

The whole way the energy market functions needs a radical re-think. Suggestions made above although positive are just tinkering around the edges, yes we might save a little on our bills, but that will only give energy companies that bit more latitude to increase profit margins.

Many will I’m sure disagree but I don’t think fundamental elements of national infrastructure can be left to market forces to operate for the benefit of the citizens of the country. And if the market force approach is promoted further we’ll see a privately run NHS, and perhaps even eventually the Police force and Defense. They’re the only things we have left to sell off.

For the national infrastructure basics a market force approach doesn’t work (except for shareholders of course). Surely we must have started to realise that by now? I think I do and will vote accordingly next opportunity.

French with a centrally organised electricity industry and who have been making long term plans for decades pay 11.03p per KwH for the domestic tariff. The UK has gone from long-term planning to market forces and consumers paid 13.93p until this pay round. The early closure of coal stations, using the EU as an excuse has meant the building of many gas fired generating plants has been necessary. And that costs.

The Germans pay around 21.38p which is the result of politicians deciding to close nuclear power stations by 2022 and the political “need” to go for renewables which now makes up 25% of the generating capacity.

The real fly in all this planning must be that according to the Germans their power requirements will diminish by 25% by 2050. !

So I am with you JW – infrastructure industries need to be under a single body who can make long term plans without fear of shareholders and politicians. Rather like the CEGB in its heyday.

Cancelling the smart meter programme would be a painless move that very few people would oppose and should enable energy bills to be lower than they might otherwise be [if not actually reduced]. It could still be voluntary so that people who wanted to have a smart meter could do so and possibly benefit from a discount on their bills because of automatic meter reading.

The only real advantage I can see with smart meters might be to allow prepayment customers to get cheaper fuel. It has always seemed unfair that those who pay in advance are charged more than those customers who pay at a later date.

Which have asked me to sign a petiton on an email headed: “Ask George to cut rip-off energy companies down to size”. Whilst I want to see lower energy bills, this sort of sensationalist headline without explanation is not what I expect from Which. We need a full exposure of the costs of energy bills – currently under the scrutiny of a Parliamentary commttee (televised as we speak). 8% increase in wholesale gas prices, 10% increase in transmission charges, 30% increase in green levies – all outside the control of the energy companies who make 5% profit. If these figures are true, then you cannot use the term rip-off.
But are they true? We need to find out so we can assess just how energy bills can be controlled. Who puts up the price of transmission by 10%, and who approves it – Ofgem? Who increases green, Eco and social levies and should these be transferred to general taxation? Is a 5% profit reasonable?
Fuel poverty needs addressing – I think this is best done through the welfare system, not by cross-subsidy within the energy bills – do you?
I hold no brief for energy companies – I’ve just been renegotiating two supplies, one from npower that was increasing by 15%. I do, however, want to see an objective approach that is fact based.
Come on Which – facts first rather than tabloid-style headlines. Make this a fact based petition, not an emotive one.

“8% increase in wholesale gas prices, 10% increase in transmission charges, 30% increase in green levies – all outside the control of the energy companies who make 5% profit. If these figures are true, then you cannot use the term rip-off”

But are they true Malcolm?

You mentioned the Parliamentary committee on TV where energy suppliers were questioned about prices. Well the head of OVO reckoned that wholesale prices had not increased as the others maintain.
Of course if you are both the wholesaler and the retailer selling energy essentially to yourself then you can say what you like about wholesale prices can’t you?

So the if and when we get the real facts we can say for sure if we’re being ripped off or not. Until then the smoke and mirrors explanation where we’re told that buying energy wholesale is very complex (suggesting we wouldn’t understand) leads me to think it is a rip off. And also therefore how much of the other percentage increase for transmission, green levies etc. can we believe?

One thing I am sure of is that suppliers, especially the big six, have only one objective. That being to provide their share holders with a return. Such is the nature of the free market, a fact of life.

There is no room for social responsibility in the free market. The “hope” is that competition will keep final prices low?

Well what competition?
And where are the low prices?

Elements of the basic infrastructure of the nation cannot be left to the free market.
It’s not working.

Chris, I don’t know if the figures are true – that is why I want the facts brought out. It is a complex area – not just understanding the cost components and how they are determined, but also how company profits are assessed – another complex issue.
My interpretation of the wholesale gas information this shows is that there has been around a 10-12% increase in the last two years. However, prices are apparently set on forward costs, to hedge the suppliers against unforeseeable increases, and this can affect the interpretation of wholesale price changes.
I’m not sure about OVO – despite their assertion about wholesale gas prices, their price to me would be around 25% more than I have just changed to with nPower. Not straightforward?

The big energy companies are seizing on the “green levies” as a scapegoat for part of their high charges and are advocating that this element be transferred to general taxation. Is this fair for people who do not have mains gas or electricIty [or both in some cases] but who nevertheless have to pay taxes and duties? I am not sure. One way of transferring it to taxation without affecting households that use expensive oil or LPG for heating [a considerable number] would be to raise the VAT on gas and electricity from 5% to 6% [or whatever it takes the balance the books] but that would be a pretty circular and pointless exercise. I would welcome a lot more transparency on the price we pay for energy. For example, does VAT go on the whole charge after the “green levies” have been included or only on the nett charge? If the former, the VAT is a tax on a levy!

why did only one of the big six send their C.E.Os, the M.Ps should have ordered all of them to attend & not send their minions, I suppose they knew they would get a grilling & could not justify their latest inflation busting rises. Shame on them.

What was needed were senior executives who knew the answers to questions – rarely are these CEOs.
What was a disgrace was the lack of preparedness of those on the parliamentary committee – no joined-up interrogation, no apparent serious background knowledge on which they could effectively challenge the companies, and one or two intent on scoring political points instead of dealing with the real issue (I’m less interested in the CEOs bonus than what makes up my bill and seeing it minimised. Civil servants also get bonuses in these austere times)
If we are to have committees investigating issues such as this they need to consist of MPs who are knowledgeable and effective in well-managed coordinated questioning, with a plan. Perhaps such people don’t exist among our representatives.

Well said Malcolm. I think there are a few regulars around the table of Which? Conversation who could make a much better fist of getting answers to the important questions and penetrating the obfuscation. The oil producing countries have OPEC; the electricity suppliers have OPAQUE.

Honest Bern says:
1 November 2013

Over the last 18 months I have changed all my lights to LED. Just changed 12 clear candle 40 watt lamps over too ALDI 4WATT LED LAMPS CLEAR GLASS LAMPS A SAVEING OF 440 WATTS. BITT OF A OUTLAY IN CASH. BUT I HAVE JUST HAD A £300 RE FUND FROM SOUTHERN ELECTRIC.

jamie says:
2 November 2013

why do we have to pay a standing charge for meters after all the energy supplier needs some
means to calculate payments, the equipment and cables belong to the supplier to enable the
said to sell electricity, gas, and water.
The meters in my house e.g. have been paid for time and time again, or am I wrong in. this matter, I think if this charge was abolished a saving could be made

Linda says:
3 November 2013

I have just read in todays newspaper that MP’s claim their fuel costs on expenses. It comes as no surprise that the Government does nothing to stop the energy companies inflating their prices. It’s not in their interest as the rest of us pay for their fuel.

Does anybody really expect someone allegedly worth £4.5m to have any understanding whatsoever of the impact that the recent energy price rises will have on the vast majority of the public, many of whom have had little or no increase in their income for the last few years ?
Good luck with this campaign but don’t be suprised if we’re having the same discussion next year……..and the year after etc. etc.

Why is it that the government have given powers to ofwat that enables them to stop water companies from raising their prices which indeed they have done and not the same powers to ofgem so they can stop these big 6 ripping us off.

I suspect that politicians expected that competition in the energy market would artificially keep prices down whereas there is no competition in the water industry.

Just shows what little they know.

What I find amazing is that no reader, and especially not Which? feels it necessary or even useful to look at what is happening in other countries to power prices. If we find that that most countries have had major price hikes perhaps we will realise that it is actually not just us.

Also seemingly not of interest is that I can almost guarantee that everybody is using more power than a decade ago. The BRIC countries are increasing their generating capacity as fast as they can so we are all aiding rising prices.

I am sat in a house with the heating off and it is roughly 12C indoors but I am wearing thermal underwear and a shirt two sweaters and apart from my hands toasty warm. Now obviously not ideal for some people but it is interesting how accustomed we have become to perpetual central heating.

I have a warm air system that operates at over 90% efficiency and so far it has been turned on twice for a total running time of around 12 hours. Plan B instituted today is to move the TV into a smaller upstairs room where body heat and that from the electronics may be an interesting test on what temperature can be reached.

Which? in decades pat I thought did surveys of thermal wear but I am afraid I cannot see anythng whatsoever even using the archive to 2005. There was a smidgen on anti-cellulite pants – perhaps we could have something that helps with keeping bodies war?!

Btw I agree with the comment on populism but assume that Conversations is really used to elicit posts rather than anything else. Which? has its new Survey , launched last year, and I have to say I was disturbed when you dig into it it provides details of political leanings [to the three main parties] of the respondents.

I have long believed Which? was and should be apolitical so to find this information being gathered seems wrong for a Charity.

DieselTaylor, I have referred to this site in the past for domestic and industrial fuel prices in the EU. http://www.energy.eu
Also found;
EU average unit prices for May 2013 indicate for:
Electricity – France was 15% cheaper than UK (France was 8th cheapest in the EU, UK 14th ).
Gas – France was 28% more expensive than UK (France 11th and UK 4th cheapest out of the 28 EU countries.

Bringing in energy saving habits can cut wastage and make a good difference to your bills.

Set your thermostat at a comfortable temperature that is just right for you. In winter, setting it at 1°C lower can itself bring down heating costs by £85-90 a year.
Turn heating off in unoccupied areas of your house.
Keep radiators away from doors and windows.
Use an energy-efficient shower head to control hot water usage.
Regularly clean heating vents to ensure better heating around the house.
Turn off appliances when not in use, including chargers, computers and TV points.

For more info, check this – http://vswitchusave.co.uk/blog/cut-your-energy-bills