Opposition proposals to freeze the price cap - fair for people who have fixed?

Chrysalis

Mike360 said:

savers_united said:

Mike360 said:

Opposition proposals to freeze the price cap - fair for people who have fixed?

Answer: The freeze won't happen. The Tory's won't back a Labour proposal. So any further help (if it happens) would be by other means.

I am on a Green Energy price fix and am not concerned by what Labour said they would do.

The windfall tax was a labour proposal, the cut to Vat was a labour proposal, bit of a theme developing. 

If it starts to gain traction like the windfall tax then I do see the Tories offering something similar but packaging it differently, it would save all the other handouts that are being given if its bundled into one freeze on the cap, the overall cost would not be massively different as more support is needed anyway. It would also have benefits of reduced fraud and abuse of grants that are given.

They were Labour proposals but it took ages for the Torys to come round to the idea, I am sure they tried hard to look at other ways first.  Same will happen here.

Truss isnt going to carry out these proposals, bear in mind it was Boris and Sunak who eventually did the levy, Boris is probably the most left wing in the entire cabinet and is going, Sunak probably wont have much of a say in a Truss government.

IDS revealed not long ago they were looking at doing narrower targeting.  So it wouldnt surprise me if they used something like the WHD criteria (which is horrible) and then claim that is satisfactory assistance to the poor and left it at that, yes I think Truss is that horrible, she has no empathy at all, she is currently marketing tax cuts aimed at wealthy entities as cost of living help.

Chrysalis

Ultrasonic said:

Section62 said:

Is it fully funded though?

Exactly. Plus even if it panned out exactly as Labour suggest (questionable) it is only a 'plan' for 6 months. Then what? 

We need a long term plan to cut energy use and offer targeted support to those who genuinely need it. Plans that just continue to rack up government (taxpayer) debt aren't a magic bullet.

It looks like its funded, but as you said its a sticky plaster for 6 months.

Not seen any long term plans from them. 

I think longer term help probably needs to be targeted as its the only way its affordable, so probably a social tariff at Oct 2021 levels, anyone on a means tested benefit such as UC would be eligible to apply. (to those who might be misinformed UC covers low paid workers, it isnt an exclusive out of work benefit)

Longer term there is only one realistic solution but it conflicts with some ideologies, which is that energy extraction needs to be state owned.  No private company will agree to sell it to us at significantly below market rates, energy is an essential so nationalise it.  I do know quite a lot of tory voters who have already accepted this, but I also know people who firmly believe energy should be allowed to be profited on.  The longer we kick the can down the road, the longer the pain will last that will hurt the economy and increase absolute poverty not just relative poverty.

Chrysalis

Ultrasonic said:

If we're talking about alternative options I'm personally drawn towards the idea of tiered unit prices to provide a minimum of energy at an affordable price but then higher prices beyond this to help incentivise a reduction in energy use. Potentially with the tiers varying with council tax band to factor home size into it. Support for pensioners and those with specific health needs that dictate higher energy usage could get additional support.

The Octopus etc idea to me is disincentivising energy usage reduction by fixing at too low a level given the current situation, and like other plans appears to be predicated on prices coming down long term - which may not happen.

I am also supportive of tiered unit costs, we disagree on where you think the base level needs to be high, but I am fully behind "use more, pay more".  With exceptions given to those on priority register, allow people on priority register who use expensive to run medical equipment.

Chrysalis

sienew said:

Chrysalis said:

savers_united said:

As much as I don't like interference with the energy market I feel that something will need to give this winter. 
A new PM coming in with an opposition having a costed way of avoiding carnage for alot of people is going to be hard to avoid taking seriously.
Like I say I personally don't like the idea of politicians getting involved, but the situation is getting quite serious and for people to see energy companies (not necessarily suppliers) making these large profits I think Gov't will need to act.

As far as those who have fixed then its always a gamble you take, a few have been on here saying they are good for the next 2 years, you always have the option to leave and jump back onto the SVT if it works out cheaper, although labour's suggestion is a freeze for 6 months, so you would need to work out if sticking to a fix over the longer term is better.
Final point, those on a cheap fix in band D and below have received a CT rebate, and in line for a £400 Gov't grant, do you think that is fair when someone on a SVT may be facing a energy rate 40-70% more?? Its like all polictical decisions / budgets there are winners and losers. 

You dont think its already quite serious?

Also curious why you dont like interference you have investments in energy?

Sadly labours plan is only for 6 months not much of a commitment, which is a very awkward length, exactly half of a 12 month fixed tariff length.

This scheme is most advantageous to the providers of energy, which is why they almost all most support this scheme.

It's funny to me how those who have spent the last 3 months complaining about energy company profits are now loving a scheme that supports these same energy companies more than anyone else.

I never said it doesnt help the suppliers, they obviously all scared of defaulting accounts so want this intervention.   However thats not good enough to say it shouldnt happen.  Ultimately the government needs to step in on subsidising bills, it will help the suppliers, but it is what it is.

So what do you like? no intervention, and people fiddling meters to survive?  You need to step into reality.

sienew

Chrysalis said:

sienew said:

Chrysalis said:

savers_united said:

As much as I don't like interference with the energy market I feel that something will need to give this winter. 
A new PM coming in with an opposition having a costed way of avoiding carnage for alot of people is going to be hard to avoid taking seriously.
Like I say I personally don't like the idea of politicians getting involved, but the situation is getting quite serious and for people to see energy companies (not necessarily suppliers) making these large profits I think Gov't will need to act.

As far as those who have fixed then its always a gamble you take, a few have been on here saying they are good for the next 2 years, you always have the option to leave and jump back onto the SVT if it works out cheaper, although labour's suggestion is a freeze for 6 months, so you would need to work out if sticking to a fix over the longer term is better.
Final point, those on a cheap fix in band D and below have received a CT rebate, and in line for a £400 Gov't grant, do you think that is fair when someone on a SVT may be facing a energy rate 40-70% more?? Its like all polictical decisions / budgets there are winners and losers. 

You dont think its already quite serious?

Also curious why you dont like interference you have investments in energy?

Sadly labours plan is only for 6 months not much of a commitment, which is a very awkward length, exactly half of a 12 month fixed tariff length.

This scheme is most advantageous to the providers of energy, which is why they almost all most support this scheme.

It's funny to me how those who have spent the last 3 months complaining about energy company profits are now loving a scheme that supports these same energy companies more than anyone else.

I never said it doesnt help the suppliers, they obviously all scared of defaulting accounts so want this intervention.   However thats not good enough to say it shouldnt happen.  Ultimately the government needs to step in on subsidising bills, it will help the suppliers, but it is what it is.

So what do you like? no intervention, and people fiddling meters to survive?  You need to step into reality.

Tiered unit costs could be interesting but would need fleshing out more. Everyone getting a rate of energy cheaply (their "essential use" amount) with higher usage charged at a higher rate. Additional discounts for pensioners/disabled who have low income but higher requirements could be included. It would also work as a longer term solution and cut wastage. The idea does need work though but could be interesting to help hit net zero targets as well.

I'm most interested in targeted support though. That could be done in many ways. Cash handouts, benefit increases, £ discounts off bills for people who need support or a social tariff for those in most need. There are so many options. Fixing the price cap does almost the opposite, it helps the wealthy more than those who need help most.

And when I say targeted that doesn't necessarily even mean a small group. I don't mind if they target a lot of people but a massive blanket discount is wasteful. And financing day to day living costs as debt (which is essentially what this plan does) is incredibly stupid.

Ultrasonic

Chrysalis said:

Ultrasonic said:

Dolor said:

Labour’s plan was first mooted by an energy supplier in the early part of this year. 

It is also notably a direct copy of what the Liberal Democrats proposed last week:

Scrap the energy price hike (libdems.org.uk)

Almost the same its a bit cheaper as Labour would scrap the £400 (lib dems would keep it).  Thats why Labours costings are lower.

I was just referring freezing the price cap at the current level, but I hadn't realised the Lib Dems were proposing the £400 etc support should be unchanged. That would make zero sense.

spot1034

Chrysalis said:

Ultrasonic said:

Section62 said:

Is it fully funded though?

Exactly. Plus even if it panned out exactly as Labour suggest (questionable) it is only a 'plan' for 6 months. Then what? 

We need a long term plan to cut energy use and offer targeted support to those who genuinely need it. Plans that just continue to rack up government (taxpayer) debt aren't a magic bullet.

It looks like its funded, but as you said its a sticky plaster for 6 months.

Not seen any long term plans from them. 

I think longer term help probably needs to be targeted as its the only way its affordable, so probably a social tariff at Oct 2021 levels, anyone on a means tested benefit such as UC would be eligible to apply. (to those who might be misinformed UC covers low paid workers, it isnt an exclusive out of work benefit)

Longer term there is only one realistic solution but it conflicts with some ideologies, which is that energy extraction needs to be state owned.  No private company will agree to sell it to us at significantly below market rates, energy is an essential so nationalise it.  I do know quite a lot of tory voters who have already accepted this, but I also know people who firmly believe energy should be allowed to be profited on.  The longer we kick the can down the road, the longer the pain will last that will hurt the economy and increase absolute poverty not just relative poverty.

The US has much more affordable energy without resorting to state owned energy extraction. It has just made more sensible choices than us, refusing to give in to the green lobby and encouraging privately owned companies to ensure that their supply meets their demand. For some reason we and much of the rest of Europe have done the opposite. 

savers_united

This tiered approach is Interesting, but would you trust them to get it right. 
Essential use at a lower rate who would determine that? larger properties in colder parts of the country I.e Scotland would need alot more essential units than a flat in the south or even a similar sized property. 
You only get buy in if people believe its fair, as more switch to EVs is it fair they would be hit with higher charges, then you need to consider time of use, surely someone using majority of their electric overnight should not be treated the same as those using it at peak time when demand is already high.

Lots to think about, but with smart meters I think we would need more than a simple tier system so that people who use energy for the right reasons and at the right times don't feel unfairly treated. 

MattMattMattUK

savers_united said:

GingerTim said:

The two candidates for PM are being awfully quiet in response to Labour's proposal and allowing it a free run in the media - it's almost as if they know they are going to have to row back on their campaign pledges the moment they get in, and do something similar...

Now the lid is off it is going to be difficult for either candidate to get this proposal (fully costed) by labour back in the box. Whatever happens more support will be needed. 

It might be fully costed (in that they have done a costing exercise) it is not fully funded. It relies on the Windfall tax generating the revenue that they think it will, ignoring the realities that the windfall tax changes companies behaviour to minimise taxable profits. The reason energy companies are undertaking share buybacks rather than large dividends is because share buybacks increase the value of all remaining shares whilst reducing taxable profits, it benefits shareholders considerably more than declaring the profit and having to hand over 55% of it in tax, before it is then taxed again when received by shareholders. Labour's (and the Lib Dems) calculations also rely on using the windfall tax from 12 months, which would not be paid until September-December 2023, to fund six months costs from October 2022 - March 2023. Not only does their plan involve borrowing around £35 billion in the hope that they will get that £35 billion back, but it ignores the fact that real world estimates put the maximum raised by their extension of the windfall tax at no more than £10 billion, and likely lower. However that does not matter, the proposal now, free stuff, paid for by someone else, is popular, the fact that cost wise it falls apart a year later will be ignored.

There would be some benefits from this proposal in that it would reduce inflation slightly, so reduces government costs on debt repayment, however it would at most account for less than one percent off of inflation, as an example Brexit costs us around 6% on inflation, so the government is obviously not that bothered about inflation, even if it claims to be. 

MattMattMattUK

[Deleted User] said:

A ‘plan’ is gaining momentum:

https://www.theguardian.com/business/2022/aug/15/centrica-and-octopus-back-plan-to-freeze-uk-energy-bills-for-two-years

Think of it as taking out a long-term mortgage to pay off our high energy bills over the short term.

I would not say it is gaining momentum at all, just that some people are making a bit of noise about it. 

I do not want to take out a long term mortgage to pay our high energy bills over the short term, firstly because that is awful financial planning, secondly because that makes the almost certainly wrong assumption that energy costs will fall significantly within that period and finally because the estimated £130-160 billion of cost would buy us ten large scale nuclear plants capable of generating 33,000 MWe of power which is more than our entire fossil fuel generation capacity of 31,000 MWe. Building those nuclear plants and the government funding them would be a far better use of £150 billion, it would reduce energy costs long term, dramatically increase our energy security, create a revenue stream for the government and hugely cut our carbon emissions.