Slash energy bills to pre-crisis levels for poorest Brits
Ofgem has today cut its energy price cap to £2,074 – the first drop in two years.
While this may seem like great news for consumers, it still leaves people paying significantly more than they did before the energy crisis hit in October 2021.
While the weather may be getting warmer and the days longer, we should already be looking ahead to next winter.
National Energy Action estimates there are at least 6.6 million households in fuel poverty – and as MoneySavingExpert boss Martin Lewis has pointed out, the state has paid far less than planned to support people’s bills, meaning there is scope for targeted support to help the most needy households.
As an energy firm boss, I believe we can get bills back down to pre-crisis levels for the most vulnerable households, ensuring warm homes for everyone.
Here’s how I would do it in just three simple steps.
Issue a Social Discount payment of £650 to each person in fuel poverty. It’s quick and easy to deliver as the mechanism is already in place for existing measures such as the Warm Home Discount and the Energy Bills Support Scheme. Crucially, it is 100% targeted at the families that need it most.
Axe the Renewables Obligation. This is currently added to every household bill to the tune of £80 a year and I really don’t know why. Participating renewable generators already receive the market price from the sale of electricity plus a subsidy on top. This makes the cheapest form of electricity cost the most. This sick irony simply must stop.
Sort out Standing Charges. Last November, the Public Accounts Committee estimated around £94 of your standing charge is paid for the 30 energy firms who have gone bust since July 2021. You don’t pay for shops or restaurants who go broke, so why should you pay for failed energy firms?
Many companies foundered due to their own incompetence, such as not hedging future energy prices properly or adopting daft marketing ideas like giving customers unsustainable amounts of ‘free’ energy to get them to sign up. Known as the Supplier of Last Resort levy, it should be ditched immediately, whilst costs already recovered should be refunded to households.
Apply all of these measures and an average annual bill for those in fuel poverty will drop to under £1,300, roughly the same figure as before Putin’s war in Ukraine.
If we want to go even further, there are extra savings to be made by ensuring everyone across the UK can adequately heat their homes.
The average GP appointment costs the NHS £40, while an A&E admission is £600. Think how many of these we’d save by ensuring people can stay warm? The potential savings to the NHS could be in the billions.
I passionately believe we are a country that cares about others. We want to do the right thing. Those with the broadest shoulders paying a little more tax to help those who need it is absolutely the right thing to do.
These three measures will even keep that to a minimum – and could be funded, in one fell swoop, via the Treasury’s Energy Price Guarantee underspend windfall. This Government can still show its compassion next winter – easily, cheaply, and effectively. But will it?
Bill Bullen is Founder and CEO of Utilita Energy.
