Is there any way to bring down our fuel bills?

Labour wants to freeze prices. The Government says it will cut green taxes. So do the experts have any better ideas about how to solve the problem that’s divided Westminster? Tom Bawden finds out

Tom Bawden
Friday 25 October 2013 21:25
Andrew Cooper, the Green Party’s Energy spokesman
Andrew Cooper, the Green Party’s Energy spokesman

‘Scrap HS2 and spend the money on insulating homes’

Andrew Cooper, the Green Party’s Energy spokesman

“The Government should scrap the HS2 high-speed train that is due to cost between £50bn and £80bn… and use that money to fund a mass energy efficiency programme. The surest way of reducing energy bills is by making homes more energy-efficient and the HS2 money, which is funded by taxes, could be spent making sure millions of people have properly insulated lofts and walls, creating worthwhile jobs.”

‘Take out a fixed-rate deal and save £120 a year’

Anne Robinson, director of consumer policy at uSwitch, the price comparison website

“For consumers trying to keep their bills down, the most important thing is to go for a long-term fixed deal. We’ve had big hikes in bills this year and it wouldn’t surprise me if we had big hikes next year ahead of the election. There are some really long fixed deals available… and most people could save 10 per cent by taking one out.”

‘Remove VAT on energy – but don’t cut green taxes’

Andrew Horstead, head of commodities research at Utilyx, an energy consultant

“The Government’s hands are quite tied on this, but it could strip out VAT for energy, which is levied at 5 per cent. A windfall tax [as suggested by John Major] could impact on investment and that would be detrimental to the energy supply and we need to hold back from creating more uncertainty. And if you strip back green taxes, the Government is no longer showing support for renewable technology and climate change. This sends out the wrong signals to the investment community.”

‘The tariffs target the low-paid, so change them’

Charlie Spencer, chief executive of Spencer Group, an engineering firm specialising in renewable energy

“Currently, energy tariffs are structured so that the higher rates apply on the first part of energy bills. Therefore the tariff structure penalises those who use least. Often these are unemployed or those on low wages. For example, I live in a five-bedroom house in the Hull area and pay for my electricity on a single tariff of 11p per kilowatt hour (KWh). Elsewhere in Hull, people on low incomes will be paying 20p for most, if not all, of their electricity. That cannot be right… So set a maximum tariff for the first part of energy bills.”

‘Take the cost of government schemes off energy bills’

A spokesman for Scottish and Southern Energy

“The most effective way to reduce energy bills is to take the cost of government environmental and social schemes off bills and pay for them through general taxation. This would reduce bills by £110 immediately and shift the burden of paying for these schemes away from those who can least afford it, on to those who can.”

‘The energy suppliers control enough of the bill to cut prices’

Will Straw, associate director of IPPR, the left-leaning think-tank

“The energy providers only have control of about 15 per cent of the energy bill in the form of profits and operating costs but that still leaves plenty of scope to cut prices… In a truly competitive market there would be downward pressure on operating costs and profits and it looks like the big six are sitting on their laurels and not driving down operating costs because they don’t need to – although it’s hard to tell for sure because there is very little transparency in the way costs and profits are allocated between these businesses.”

‘We are not attracted to Miliband and Major’s ideas’

Angus McCrone, energy expert, Bloomberg New Energy Finance

“We need to have a diversified energy strategy – some shale gas, a bit of nuclear, as well as renewables. Where possible you should go for the low-cost option, for example with wind, instead of expensive offshore wind we could import onshore wind from Ireland… which is likely to be cheaper. The big six have to continue investing at a high rate and so they do need a decent level of profit. We are not attracted to Ed Miliband and John Major’s ideas at this point.”

‘Cameron’s idea of rolling back green levies is stupid’

Dr Doug Parr, chief scientist and policy director at Greenpeace UK

“The Government is increasing bills by being so draconian about trying to bring them down. David Cameron’s idea of rolling back green levies is as close to stupidity as it is possible to get because the uncertainty it creates in the mind of investors will put up the cost of capital. In the short term, the best way to bring down prices is to scrap the… tax on carbon emissions that has put up people’s bills by about 2 per cent this year.”

‘We can’t privatise and say we don’t want firms to make money’

Dr Robert Gross, director of the Centre for Energy and technology at Imperial College London

“There is no silver bullet to get bills down in the short term as it is not in the gift of politicians to control gas prices. We’re a small island … at the mercy of the vagaries of the global supply picture for fossil fuels. In 15 to 20 years’ time we might be able to make renewable and nuclear energy sufficiently cheap but we are not in that position yet. You could cut support for renewables, but then people would stop investing in the things that in the long-term should insulate consumers from damaging swings in prices. We can’t have our cake and eat it. We can’t privatise the energy providers and say that we want you to work with the benefits of competition and to invest and at the same time say we don’t want you to make any money.”

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