Cameron’s plans to cut energy efficiency would push up energy bills
SSE, British Gas, Npower and Scottish Power have all recently announced inflation busting increases of around 10% on an average dual fuel bill. At a time when wages are falling in real terms, these staggering increases will mean many families face the frightening prospect of choosing between heating and eating this winter.
Ed Miliband has laid out Labour’s approach to tackling spiralling energy costs. If elected in 2015, Labour will freeze prices for 20 months while implementing reforms to improve competition between energy companies. They would also scrap the current energy market regulator Ofgem and establish a new body with stronger powers. These are bold announcements and Labour’s price freeze in particular has proved incredibly popular with the public.
This has forced the government into a corner and they have been under huge pressure to come up with their own policies to tackle high energy bills. David Cameron made his move this week by announcing a “competition test” for suppliers and the “roll back (of) some of the green regulations and charges that are putting up bills”.
The competition test is a reasonable idea but will probably just repeat the findings of a long drawn out review of the retail market recently completed by Ofgem. Of more concern is the roll-back of “green energy taxes”. This may be popular with a number of Conservative politicians and certain elements of the press but could be hugely damaging to industry, would cut jobs, would threaten our climate change targets, and most importantly would ultimately increase energy bills.
Reports suggest that the government is looking closely at cutting one policy in particular, the Energy Company Obligation (ECO), which adds approximately £50 a year to the average household’s energy bills.
This is the wrong focus, since ECO is specifically designed to tackle the rising cost of energy and keep bills down. The primary function of ECO is to deliver energy efficiency improvements for low income households – the group worst affected by rising bills.
Energy efficiency is important because it can reduce the amount of energy being wasted within people’s homes, bring down bills, improve levels of comfort and cut carbon emissions from the residential sector. Ending the support it provides to vulnerable households would be a retrograde step. The government should instead focus on improving the policy, for example by actively engaging local authorities and community groups.
The government should also work harder to fix its flagship (but flagging) Green Deal energy efficiency policy. This scheme was launched in January with an objective to treat millions of home but has so far delivered efficiency improvements to just 57 households. Forthcoming research from IPPR will show that the scheme could be substantially improved by engaging people at the local level and improving the deal that households receive.
The government needs to take action to help families with the high and rising cost of energy. Now is not the time to slash energy efficiency policies. Now is the time to get them right.