UK government knew about energy crisis 7 years ago

With a long, cold winter looming and the rising cost of gas and electricity bills, the nation is wondering just how effective the recently released aid package from the Government is going to prove, and how hard fuel poverty is going to hit them.

This new term describes the situation of anyone who will have to pay more than a tenth of their income on heating their homes this winter. In the last year, electricity and gas prices have reached record highs, going from £942 in the average household at the start of 2008 to more than £1,400. Furthermore, energy companies have warned that a harsh winter could push up gas prices even more as they do not have enough gas in storage to cope with bad conditions.
The outlook for the end of 2008 does indeed look bleak. But this week the Government introduced their energy aid package which resolves to help the estimated 5 million who will suffer from fuel poverty.

The Government have invested £910 million into this plan, which consists of giving pensioners and low income households free cavity and loft insulation to provide long term energy and cost saving benefits. Everyone else will be entitled to top half price energy saving measures, and cold weather payments for the most vulnerable have also been increased from £8.50 per week to £25. For the 500,000 poorest households, there will be a freeze on this year’s bills.

Each of the biggest UK power firms has been made to contribute £50 million towards energy saving funds but many critics of the plan are already predicting that the companies will pass costs onto customers through augmented prices. With the saying that the customer always pays ringing in the general public’s ears, the Government admits that they are powerless to prevent energy firms making their customers pay for this contribution.

The major power firms’ motivations were further highlighted last week when chief executive of E.On, Mark Owen-Lloyd joked during an Ofgem conference that in a worst case scenario, higher gas prices would “mean more money for us.” Mr Owen-Lloyd’s shocking insensitivity sparked outrage across the country, leading some to question why Gordon Brown hasn’t opted to impose a windfall tax on the largest energy companies in order to ease prices.

The Government’s avoidance of enforcing a windfall tax has led to criticism from the gas and electricity watchdog Energywatch, who commented that “lack of political will to tackle fuel poverty is not just disappointing, it approaches negligence.”

However the aid package has won support from much of the press. House insulation has been described as a small, but “sensible” measure that aims to tackle the problem of energy saving, rather than relieve the symptoms of it. As UK housing stock is amongst the least efficient in Europe, cutting down on the amount of heat lost through flimsy constructions is a vital social contribution in cutting emissions of greenhouse gases.

The Times praised the Government’s resistance in choosing the easy option of forcing a windfall tax on energy firms. Acknowledged as the right decision, it said major tax changes should not be brought about under pressure. Adding to this opinion, The Daily Mail predicted that a windfall tax would have distorted the market and driven big businesses abroad.

Whether these small and sensible measures will benefit the thousands of elderly in the North who are the most at risk this winter remains to be seen. The PM’s opposition have questioned whether these ecological and cost-saving actions will actually make a difference to the millions of struggling families and have accused the PM of being out of touch with the nation’s most basic needs. Meanwhile, it is up to the main UK energy companies just how harsh this winter will be for their customers.

Source - Debt Management Today