Bills are due to rise again this winter, but we found little on offer to fix this from the main political parties.
As the election period reaches its final stages, commentators and campaigners are beginning to point out the lack of detail from the main parties when it comes to tackling poverty. With an estimated 39% of UK households currently unable to afford everyday essentials, the cost of living crisis continues to bite. And the price of energy has been the biggest contributor.
Despite still sitting at historically high levels, energy bills haven’t featured heavily in this election. After a brief respite in wholesale prices, forecasts suggest the issue will make a grim return this winter when the price cap rises again by £200, taking the average bill up to £1,761.
But, more than two years since Russia’s invasion of Ukraine spiked energy prices, and with temporary support measures now expired, nothing about how our energy bills work has changed. The few protections against fuel poverty available, such as the winter fuel payment and the energy price cap, continue to fail millions of vulnerable households.
We need action across the energy system, from the turbine to the thermostat. But energy bills are where the buck stops. We’ve taken a look at what each of the six largest parties have to say about our energy bills — and perhaps more importantly, what they don’t.
Variable charges
There’s surprisingly little substantial policy from the parties on the variable component of bills (the part of your bill which goes up or down depending on how much energy you use). We couldn’t find a single additional pound of spending committed to cutting bills from any party.
The Labour party aims to invest in renewable energy, including through a national energy generation company, Great British Energy (GBE), to bring down bills. It’s not clear how GBE will achieve this, but the long lead times on energy generation projects suggests it could take many years. There’s more certainty that their programme of investment in home energy efficiency (an extra £6.6bn over the next parliament) can bring down bills but, again, it’ll be a slow burn, especially as the party significantly scaled back its proposed level of investment when their £28bn a year investment plan was ditched. While the party also commits to “energy system reform” there’s only a vague pledge of a “much tougher system of regulation” and no new money proposed.
Similarly, the Greens offer little direct support for energy bills, and hope for savings arising from a major programme of investment in home energy efficiency (£29bn over the parliament) and rapid decarbonisation of the electricity grid. While they don’t dedicate new spending to cutting energy bills, the Greens are unique in explicitly offering new money to increase social security payments, with a £40 a week uplift to universal credit, ending the two-child benefit cap, a 10% rise to carer’s allowances and 5% for disability benefits. These will all help households pay their energy bills. The Greens’ income support package is worth around £24bn a year over the next parliament.
For the Conservatives the focus is on the “policy costs and levies” on energy bills. These make up less than 10% of the average gas and electric bill, but the Conservatives pledge to “ensure they are lower in each year of the next parliament”. No money is attached to the pledge and it’s not clear how much lower they would be or how much this would save households.
Reform UK suggests that their plans to “scrap net zero” and “unlock Britain’s vast oil and gas reserves” would save households money. This is total nonsense and would likely achieve the very opposite effect as fossil fuels are both more expensive than renewables, and are destroying the planet. Their plans to remove VAT and environmental levies from energy bills would probably reduce bills in the short term but their commitment to a fossil-fuelled future would leave households exposed to the very same drivers that caused the energy price spike in the first place.
The Scottish National Party and Liberal Democrats have slightly more to say. Both the Liberal Democrats and SNP call for a “social tariff” to provide “targeted energy discounts for vulnerable households”. In both cases however, little detail is provided on what the tariff actually is (social tariffs can take many forms but usually involve discounting costs for low-income households). No money is committed, no bill savings estimated, and no information provided on which households would be eligible.
The UK already has something akin to a social tariff, the “warm homes discount” which is available to certain eligible households on means-tested benefits. It is unclear how the proposed new social tariff would differ, or how it would improve upon the flaws in the warm homes discount — specifically, that millions of vulnerable households on low incomes miss out because they are not registered or eligible for means-tested benefits.
The SNP, like Labour, see a role for some partial public ownership in energy generation, and hope this will reduce bills. However, the SNP stand out as they also call for an “essentials guarantee” which would ensure that “everyone can afford basic necessities like food and utilities” (of which energy is presumably one). This sounds like a universal approach to delivering energy security to households and would presumably make the social tariff redundant.
Standing charges
A major factor driving up energy bills recently has been the standing charge (the fixed daily charge paid on both gas and electric bills regardless how much you consume). Standing charges on electricity have more than doubled in the past four years. Not only is this costly for households, it’s arguably unfair for those that consume less energy (typically those on lower incomes).
This is recognised by most of the major parties, but none have anything concrete to offer. From Labour there’s a plan to “work with the regulator to reduce them”, from the Conservatives there’s a plan to “review and reform” and “keep them as low as possible” and the SNP will “press for a significant cut”. The Greens and Lib Dems say nothing explicit, and Reform “will ensure standing charges are capped” (standing charges are already capped but that hasn’t brought them down).
The energy crisis should have been an opportunity to fundamentally overhaul the energy system. We need a new triple lock on energy security to ensure no household ever faces the dire choice between eating and heating. This means achieving security through home-grown renewables, reducing demand in the long term through more energy-efficient homes, and redistributing energy costs via a more progressive billing system. Some manifestos promise a renewables revolution without fixing the regressive system, which could result in the poorest paying a price for the transition, while the wealthiest enjoy the rewards it brings. Whoever is in government from July should seriously consider introducing a more progressive system of distributing energy costs, such as NEF’s National Energy Guarantee.
Image: iStock
