Energy prices spiral, fuel poverty increases – time to rethink fundamentals

As energy prices continue their upward spiral hundreds of thousands of families are now spending a huge share of the income on energy. Once this share goes above 10% of the income the family is said to be in fuel poverty. The UK are under an obligation to abolish fuel poverty, because it is scandalous that anyone in a civilised developed and wealthy nation should suffer from hypothermia or be without energy, in the same way that it would be scandalous if people in the UK were starving.

The strategy that the government chose for the abolition of fuel poverty was a legal statutory obligation; it passed a law requiring that fuel poverty be abolished. The tactics employed to achieve the strategic goal were a variety of capital grant schemes to pay for things like installation of heating systems and insulation and low energy light bulbs and in some cases solar systems, all to reduce the financial strain on those in fuel poverty.

From 1996 to 2003 it looked as though these tactics would work as the numbers in fuel poverty fell from four million households to one million households.  Today with the massive increase in fuel prices there are now more than four million households back in fuel poverty and the numbers are rising each month.

The poor get a very poor deal when it comes to energy. They have to use pre payment meters because their credit is not good enough to enable them to pay a big bill every month. The market ploys of the energy companies mean there is a plethora of different tariffs, with the lowest tariffs being enjoyed by the largest users and those with internet access for billing and bank account s for direct debits.

Of course, if you are poor you try to use as little energy as you can get away with and you often do not have a bank account which can be used for a direct debit without causing problems and you often do not have internet access.

So the fuel poor struggle with the highest tariffs and pre payment meters. Having paid in advance they pay the most for each spark of electric lighting, or each radiator of heat or each sink of hot water.  What is worse is that the money available to help people in fuel poverty has been trimmed back. The Warm Front scheme has had its budget reduced from 360 million to £270 million.

It may sound simple but fuel poverty is directly related to energy prices. There will always be more people in fuel poverty when energy prices are high. The way to reduce fuel poverty is to take a strategic view and I think that problems of fuel poverty and problems of energy security and problems of energy supply are all linked.

I have always thought that the basic strategy was misconceived. You cannot tackle fuel poverty without first providing a coherent and sensible fundamental energy policy. There are some serious and hard questions that we need to ask in order to formulate an energy policy:-

·         Is the free market in energy failing the country? It is surely inevitable that energy companies will seek to profiteer from energy prices, in exactly the same way that oil companies do.

·         Can we continue with the present structure of energy being supplied by quasi monopolies or has the time come for the state to control energy supply?

·         Should we compel energy suppliers to have a single tariff, structured so that the consumer pays more if the consumer consumes more, rather than providing discounts for high energy use?

·         Should we not loom at the use of renewables for those in fuel poverty, rather than traditional means? Renewables once installed cost very little to run.

·         Do we have to look beyond high prices? As prices become higher so energy rationing becomes nearer. What should be doing to avoid or minimise the prospect of energy rationing, which may be only five years away.

It is hard in Government to rethink fundamentals. The day to day process of administration wears out the law makers.  They become immersed in detail. On top of that the present unpopularity of the government is another factor, which distracts them.  The upward spiral of energy prices, the increased numbers in fuel poverty and a bleak energy future creates circumstances which demand fundamental rethinking.

Ideally a government should do its entire fundamental think when it is in opposition. By the time it arrives in power there is too much political capital to be lost by coming up with a new idea which your opposition will taunt you with as a U turn. Some U turns are not only very good, but essential. If you are driving up a blind alley, what else could you do?

4 Responses

  1. Following the collapse of Russia back in the early 90s, Cuba went into meltdown as it lost around 2/3 of its oil imports and around 80% of food.

    In quick-time, the country adjusted to a more local-centric and agriculturally-based way of living, with few losses along the way.

    The point of bringing that up is to highlight the inherent weakness within our current political system: democracy.

    It has been said that Cuba adapted so quickly precisely because it’s a dictatorship.

  2. Trouble is, democracy is the least worst political system. Our politicians will not have the necessary courage until the lights go out.

  3. same as majority of companies CEO as they has so much to lose and so much to care about.

    however, sometimes we just could NOT give mercy to those poor who want to stick to be poor and not climbing up with ambition and proactive learning.

    Anyway, if we all good, that would NOT call “society”.

  4. Thanks for sharing

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