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

Chrysalis

MattMattMattUK said:

Chrysalis said:

Chrysalis said:
Labour have definitely shifted when they previously moaned about owners of multiple properties benefiting from the £400, yet are now proposing a blanket cap freeze which would benefit those people much more.

The flat £400 does not benefit any household more than any other, because it is flat.

I didnt say that, not sure if you deliberately twisted or misinterpreted.  

I really cannot understand how you would have misinterpreted it hence the twisted comment.  So spelling out time.

The £400 is given multiple times to individuals who own multiple properties where they are the billpayer.  It was considered unacceptable by Labour not so long ago, but now they have shifted to having no problem with it.  

sienew

savers_united said:

wittynamegoeshere said:

There's a real chance that those with fixed tariffs may not end up paying MORE than those on the capped rate.  E.g. if the capped rate involves an uncapped supplier and/or there are exit penalties to pay.

I'm not looking to do better than everyone else, but a government "help" policy ending up directly costing people money would be pretty unusual.

Nobody took out a capped rate just for fun or for a bit of a silly gamble.  It was a calculated risk against the predicted rise, which was supposedly set in stone according to a formula.  We were choosing a less terrible alternative when faced with a horrendous projected rise.

If the wholesale rate had dropped then I would have no grounds for complaint.  If the entire rulebook is to be torn up and thrown away then that's different.

There are approx 6 mil households on a tariff other than the SVT, that leaves 22mil on the SVT. From the 6mil there is likely a high percentage who would not want to switch to the SVT as their fix is a 12mth or more in and below even a freeze to the cap, others on longer term fixes may be happy to ride it out for those 6 months of the freeze to gain over the longer term. 

I think you are significantly over-estimating how good the fixes that most people are on actually are. Reading lots of energy posts here I'd say most of the fixes are at or at least close to the expected October price cap. Mine for example is roughly at the expected October price cap and was slightly above the expected price cap when I was offered it but hopefully will be cheaper than the variable come January. Those that have the "cheaper deals" (mostly those who got a fix in April) have often been paying more than the price cap for 6 months in the hopes that they'll save in October when the price rises again. So in reality almost nobody is laughing to the bank on a fixed deal like you seem to think.

Chrysalis

Mstty said:

MattMattMattUK said:

Dolor 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. 

Yes but that doesn't benefit peoples pockets here and now so it's a non runner lol.

Short term pain for long term gain is not something recent generations will tolerate.

If it didn't come across correctly I agree with this being used for nuclear power and other green power generating projects.

Ironically I think its the older you get the more short termist you get.

Younger people tend to favour higher taxes, social housing investment, infrastructure investment, buy back of privatised industries, democratic reform.  Most of these are long term policies with short term pain.

Older people majority have voted for brexit, tax cuts, privatisation, welfare cuts (as long as targeted at working age) and a shrinking state.  All soundbite short termist policies with long term consequences, remembering Brexit was campaigned to give us massive savings on fantasy politics.  Since older people vote more we have have successive selfservative governments. for most of the last 43 years.

MSE ran a poll some years ago one on the GE's what it asked different age groups of what policies are important to them, the results were very interesting.

The problem we have now is we need short term "and" long term action.  Its not realistic to tell everyone to just eat up the record breaking energy cost increases, its just going to result in chaos.  The problem wont go away if we just pretend everyone will be complaint and can afford it.  But at the same time, subsidising bills whether its via COL payments or a subsidised cap, is not a solution for the future, and I do also accept the earlier point once energy companies know the government is prepare to pay the increased bills they have no incentive at all to lower prices.  So we need a long term solution as well.  Investment in energy supply, and increased regulation, however the market is global, so the UK would find it very hard to successfully regulate it.

Someone mentioned America earlier.  Their situation is nothing like ours, they actually produce as much as they consume, and their imports are steadily dropping less than 1 fifth of their consumption.  Meanwhile the UK in 1998 was a net exporter, now fast forward today we are increasing our imports every passing year and currently import around 46% of consumption.  We dont produce enough that we could keep the lights on without imports.

Chrysalis

brewerdave said:

Max68 said:

Dave, With due respect. Not everyone who is struggling to pay their bills and who are on lower wages are lazy and have their head in the sand.

Then WHY are they still on the SVR after the best part of a year's worth of warnings from all parts ? There have been exhortations from Government, Press and others to protect their future bills by fixing their unit costs. So because they haven't bothered, there is a threat to punish those who have been responsible by freezing the cap at everyone's future expense !!

Who is all parts?

There has been no advertising advising people to fix, no leaflets, no tv, no print adverts, nothing.  On top of this suppliers like Octopus advising everyone to stay on the SVR when they ring up, I was refused over the phone my wishes to move to Agile so I did it online instead.  Only a very small part of the population is members of sites like MSE, do research etc.  Most people just do what they told by their peers and mainstream media which has been promoting the cap.

Even people who work for these suppliers dont fully understand things, the responses I have got from Octopus regarding the different tariffs for the most part showed a complete lack of understanding and promoting short termism to their customers.

Also even with all this in mind, fixing only is temporary, so in a years time a big jump happens when the fix runs out, and current fixes are still massively above the affordable Oct 2021 cap.  Some people are acting as if the crisis is not here yet and starts in October, its already here, and there is already people who cant afford the April 2021 ca prices.

Chrysalis

savers_united said:

wittynamegoeshere said:

There's a real chance that those with fixed tariffs may not end up paying MORE than those on the capped rate.  E.g. if the capped rate involves an uncapped supplier and/or there are exit penalties to pay.

I'm not looking to do better than everyone else, but a government "help" policy ending up directly costing people money would be pretty unusual.

Nobody took out a capped rate just for fun or for a bit of a silly gamble.  It was a calculated risk against the predicted rise, which was supposedly set in stone according to a formula.  We were choosing a less terrible alternative when faced with a horrendous projected rise.

If the wholesale rate had dropped then I would have no grounds for complaint.  If the entire rulebook is to be torn up and thrown away then that's different.

If they do freeze the cap or offer something very similar but put a Tory stamp on it, what would it mean for you. Worst case I guess a few months of paying a higher rate whilst on the fix compared to the April SVT rate and if applicable exit fees if you wanted to switch to a SVT. 

There are approx 6 mil households on a tariff other than the SVT, that leaves 22mil on the SVT. From the 6mil there is likely a high percentage who would not want to switch to the SVT as their fix is a 12mth or more in and below even a freeze to the cap, others on longer term fixes may be happy to ride it out for those 6 months of the freeze to gain over the longer term. 

Then you have those with no exit fees. 

So we are looking at quite small numbers in the grand scheme who will want to switch and have to pay a fee, and even then fees for some may be only £40-£60.

So the impact is quite minimal overall. 

Yes the reality is anyone who fixed can unfix, whilst those who didnt fix, the best fixed tariffs are gone, so those who have fixed are in a far better position.

Also bear in mind this is just a proposal by Labour, already both Tory candidates say they wont implement it which is what I expected.

michaels

Chrysalis said:

Mstty said:

MattMattMattUK said:

Dolor 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. 

Yes but that doesn't benefit peoples pockets here and now so it's a non runner lol.

Short term pain for long term gain is not something recent generations will tolerate.

If it didn't come across correctly I agree with this being used for nuclear power and other green power generating projects.

Ironically I think its the older you get the more short termist you get.

Younger people tend to favour higher taxes, social housing investment, infrastructure investment, buy back of privatised industries, democratic reform.  Most of these are long term policies with short term pain.

Older people majority have voted for brexit, tax cuts, privatisation, welfare cuts (as long as targeted at working age) and a shrinking state.  All soundbite short termist policies with long term consequences, remembering Brexit was campaigned to give us massive savings on fantasy politics.  Since older people vote more we have have successive selfservative governments. for most of the last 43 years.

MSE ran a poll some years ago one on the GE's what it asked different age groups of what policies are important to them, the results were very interesting.

The problem we have now is we need short term "and" long term action.  Its not realistic to tell everyone to just eat up the record breaking energy cost increases, its just going to result in chaos.  The problem wont go away if we just pretend everyone will be complaint and can afford it.  But at the same time, subsidising bills whether its via COL payments or a subsidised cap, is not a solution for the future, and I do also accept the earlier point once energy companies know the government is prepare to pay the increased bills they have no incentive at all to lower prices.  So we need a long term solution as well.  Investment in energy supply, and increased regulation, however the market is global, so the UK would find it very hard to successfully regulate it.

Someone mentioned America earlier.  Their situation is nothing like ours, they actually produce as much as they consume, and their imports are steadily dropping less than 1 fifth of their consumption.  Meanwhile the UK in 1998 was a net exporter, now fast forward today we are increasing our imports every passing year and currently import around 46% of consumption.  We dont produce enough that we could keep the lights on without imports.

If you get hit by a windfall tax every time you make a profit it is not surprising if you don't decide to invest in UK production. Is this the sort of short termism you are talking about?

sienew

Chrysalis said:

savers_united said:

wittynamegoeshere said:

There's a real chance that those with fixed tariffs may not end up paying MORE than those on the capped rate.  E.g. if the capped rate involves an uncapped supplier and/or there are exit penalties to pay.

I'm not looking to do better than everyone else, but a government "help" policy ending up directly costing people money would be pretty unusual.

Nobody took out a capped rate just for fun or for a bit of a silly gamble.  It was a calculated risk against the predicted rise, which was supposedly set in stone according to a formula.  We were choosing a less terrible alternative when faced with a horrendous projected rise.

If the wholesale rate had dropped then I would have no grounds for complaint.  If the entire rulebook is to be torn up and thrown away then that's different.

If they do freeze the cap or offer something very similar but put a Tory stamp on it, what would it mean for you. Worst case I guess a few months of paying a higher rate whilst on the fix compared to the April SVT rate and if applicable exit fees if you wanted to switch to a SVT. 

There are approx 6 mil households on a tariff other than the SVT, that leaves 22mil on the SVT. From the 6mil there is likely a high percentage who would not want to switch to the SVT as their fix is a 12mth or more in and below even a freeze to the cap, others on longer term fixes may be happy to ride it out for those 6 months of the freeze to gain over the longer term. 

Then you have those with no exit fees. 

So we are looking at quite small numbers in the grand scheme who will want to switch and have to pay a fee, and even then fees for some may be only £40-£60.

So the impact is quite minimal overall. 

Yes the reality is anyone who fixed can unfix, whilst those who didnt fix, the best fixed tariffs are gone, so those who have fixed are in a far better position.

Also bear in mind this is just a proposal by Labour, already both Tory candidates say they wont implement it which is what I expected.

Getting out of a fixed tariff is often very expensive. You say the best fixed tariffs are gone but when people actually joined those tariffs they often weren't really good tariffs at the time (if they were, why didn't everyone join?), they were usually at or above the price cap predictions, it's simply that the price cap prediction has continued to rise. Many have been paying above the current price cap for months hoping that extra cost would be saved during the next price rise.

Chrysalis

michaels said:

Chrysalis said:

Mstty said:

MattMattMattUK said:

Dolor 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. 

Yes but that doesn't benefit peoples pockets here and now so it's a non runner lol.

Short term pain for long term gain is not something recent generations will tolerate.

If it didn't come across correctly I agree with this being used for nuclear power and other green power generating projects.

Ironically I think its the older you get the more short termist you get.

Younger people tend to favour higher taxes, social housing investment, infrastructure investment, buy back of privatised industries, democratic reform.  Most of these are long term policies with short term pain.

Older people majority have voted for brexit, tax cuts, privatisation, welfare cuts (as long as targeted at working age) and a shrinking state.  All soundbite short termist policies with long term consequences, remembering Brexit was campaigned to give us massive savings on fantasy politics.  Since older people vote more we have have successive selfservative governments. for most of the last 43 years.

MSE ran a poll some years ago one on the GE's what it asked different age groups of what policies are important to them, the results were very interesting.

The problem we have now is we need short term "and" long term action.  Its not realistic to tell everyone to just eat up the record breaking energy cost increases, its just going to result in chaos.  The problem wont go away if we just pretend everyone will be complaint and can afford it.  But at the same time, subsidising bills whether its via COL payments or a subsidised cap, is not a solution for the future, and I do also accept the earlier point once energy companies know the government is prepare to pay the increased bills they have no incentive at all to lower prices.  So we need a long term solution as well.  Investment in energy supply, and increased regulation, however the market is global, so the UK would find it very hard to successfully regulate it.

Someone mentioned America earlier.  Their situation is nothing like ours, they actually produce as much as they consume, and their imports are steadily dropping less than 1 fifth of their consumption.  Meanwhile the UK in 1998 was a net exporter, now fast forward today we are increasing our imports every passing year and currently import around 46% of consumption.  We dont produce enough that we could keep the lights on without imports.

If you get hit by a windfall tax every time you make a profit it is not surprising if you don't decide to invest in UK production. Is this the sort of short termism you are talking about?

Do companies get hit with a windfall tax every time they make a profit, they dont in the UK.

Please dont exaggerate.

Its not actually short termism, because what do you think happens when the population becomes broke, who is there to spend money in shops, spending money in cafes, in bars, in clubs?

Windfall profits mostly go on things like share buy back schemes and dividends which are both short termism ways of using that money.

If you going to make a point, try to make it accurate next time.

You need to look at the bigger picture, not just the corporate world.

savers_united

sienew said:

savers_united said:

wittynamegoeshere said:

There's a real chance that those with fixed tariffs may not end up paying MORE than those on the capped rate.  E.g. if the capped rate involves an uncapped supplier and/or there are exit penalties to pay.

I'm not looking to do better than everyone else, but a government "help" policy ending up directly costing people money would be pretty unusual.

Nobody took out a capped rate just for fun or for a bit of a silly gamble.  It was a calculated risk against the predicted rise, which was supposedly set in stone according to a formula.  We were choosing a less terrible alternative when faced with a horrendous projected rise.

If the wholesale rate had dropped then I would have no grounds for complaint.  If the entire rulebook is to be torn up and thrown away then that's different.

There are approx 6 mil households on a tariff other than the SVT, that leaves 22mil on the SVT. From the 6mil there is likely a high percentage who would not want to switch to the SVT as their fix is a 12mth or more in and below even a freeze to the cap, others on longer term fixes may be happy to ride it out for those 6 months of the freeze to gain over the longer term. 

I think you are significantly over-estimating how good the fixes that most people are on actually are. Reading lots of energy posts here I'd say most of the fixes are at or at least close to the expected October price cap. Mine for example is roughly at the expected October price cap and was slightly above the expected price cap when I was offered it but hopefully will be cheaper than the variable come January. Those that have the "cheaper deals" (mostly those who got a fix in April) have often been paying more than the price cap for 6 months in the hopes that they'll save in October when the price rises again. So in reality almost nobody is laughing to the bank on a fixed deal like you seem to think.

I don't think you can take a forum like this to represent the 6mil, when the media and Martin was pushing the SVT most people did not fix when offered, its not uncommon for people to be taking 2-3 year fixes, those only a year ago would have been alot lower than the April 22 cap, so still quids in even with the proposed freeze.

Someone who did fix the last few months will have paid more initially but still in a good position having secured a fix likely to be below October increase and certainly below January increase, also the past few months would have seen minimal gas use.

So they sort of have a foot in both camps, if the freeze is implemented they can choose to opt for the SVT and pay less than they would have on their Fix, if its not implemented then they still have their fix that I'd likely going to work out cheaper, so this whole debate is a bit of a non starter as it just feels that those who fixed somehow just don't want to lose anything either way. The fact they have the option to stay on a fix should the freeze not go ahead is the price they pay for that security I guess. 

littleteapot

savers_united said:

Someone who did fix the last few months will have paid more initially but still in a good position having secured a fix likely to be below October increase and certainly below January increase, also the past few months would have seen minimal gas use.

So they sort of have a foot in both camps, if the freeze is implemented they can choose to opt for the SVT and pay less than they would have on their Fix, if its not implemented then they still have their fix that I'd likely going to work out cheaper, so this whole debate is a bit of a non starter as it just feels that those who fixed somehow just don't want to lose anything either way. The fact they have the option to stay on a fix should the freeze not go ahead is the price they pay for that security I guess. 

Agreed, I don't see the any reason for people who took a fix a few months ago to be kicking up a fuss. It's just standard small-minded attitude which seems to be prevalent these days. "Someone else created a problem which caused me to make a decision based on probability rather than facts, which has cost me a little more than I wanted to pay, then someone else moved the goalposts - therefore someone else should pay me for the loss that resulted from my choice.".

As much as I dislike it, it seems that most aspects of life these days seem to boil down to taking a chance on one of two or more undesirable options, rather than there being one obvious sensible choice.

In our case we have two very young children and are on a middling single income (no benefits), therefore I value budgeting certainty above all else. So against popular thinking at the time, I chose to take a 2 year fix at about 20% above the April 2022 SVR, despite the £150 exit fee.

As far as I am concerned, this was a choice of two undesirable options, and I made the decision that I did on the desire for certainty for the next two years. I was aware the cap could go either way in October, so was prepared to pay a little more in the short term to protect us from the worst-case scenario (which as it turns out has become reality) as that worst case would have broken our budget even with all the cutbacks we have since made.

If the rules are changed again, it's no big deal as far as I'm concerned - we've paid a little more over the summer when we don't consume much anyway, and worst case I have to pay a £150 exit fee to revert to the SVR. That's not big money to 'insure' against an increase in annual costs of £2000+, and I certainly wouldn't expect anyone to compensate me for that decision if the rules change. 

Remember - nobody *recommended* that we make a particular choice, not even MSE. They just presented the facts, best and worst case scenarios, so that we could be informed enough to make our own decisions wisely based on those facts as they stood at the time, and our personal priorities.

I agree that the system is totally broken and the situation we are in is ludicrous - but expecting others to compensate us for our personal decisions if they turn out to be sub-optimal as time goes by is entirely selfish and a symptom of how arrogant and entitled our society has become.