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

MattMattMattUK

[Deleted User] 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.

Even the present PM’s sister is loudly questioning one of the prospective PM’s plans to increase prosperity through growth. My guess is that the reality of the situation will hit the new PM the moment that he/she gets the keys to No 10.

Labour’s plan was first mooted by an energy supplier in the early part of this year. The Cap would become Absolute - that is, a ceiling rather than a floor. Suppliers would be funded for the costs/profit lost via a commercial loan. The commercial loan would be re-paid by energy consumers over a number of years. It was described as a price smoothing exercise.

My ‘guess’ is that something like this could be brought in. Politicians of any political persuasion cannot ignore the fact that a Cap held for 12 months will have a significant effect on inflation and the cost of future Government borrowing.

If you look at Truss's political history she has spent most of it ignoring facts and unfortunately she appears likely to become the next PM. Her entire campaign to become Conservative leader/PM has been an exercise in ignoring facts and sticking to doctrine. Truss will likely do exactly what she has said, no additional payments, restricting those already announced and then making tax cuts which won't help most people and are inflationary, so making the current situation worse. I don't think that Sunak would be a great PM, but compared to Truss he would be far better. 

Section62

QrizB said:

spot1034 said:

What_time_is_it said:

Having recently signed up to supplier who don't offer SVT (Green Energy) would I be able to switch to another supplier if I wanted to? Or are we potentially facing a situation where we are all "locked in" with our current providers?

This is one of the many details which this 'back of the fag packet' proposal does not consider - probably because no one was even aware of such details. Those who know more about it, including civil servants whose job it is to flag up potential difficulties in policy proposals, will now be making ministers who have to make the decisions aware of such points.

Hypothetically, if the government happened to be running its own energy supply company (perhaps under some sort of special administration) they could instruct it to accept SVT switches.

The problem with that is the company may then get inundated with switch requests and have difficulties handling them, leading to poor customer service performance for all customers if the call centres get clogged up.  Not a good idea in terms of reputation if the government had plans to sell this supply company when trading conditions improved.

As it happens I'd be one of those switching if the opportunity arose - not to get a better deal or escape a poor tariff, but simply because I don't want to be with the energy company I'm currently with as a result of SoLR.  I guess that isn't a unique position to be in.  There may also be some people ideologically drawn to a 'nationalised' supplier (especially if operated on a not-for-profit basis).

I think a better approach may be for the larger companies to be told to accept new SVT customers in defined circumstances, as a quid pro quo for some of the benefits those suppliers will inevitably be getting further down the line.

Ultrasonic

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)

EssexHebridean

What_time_is_it said:

pochase said:

No supplier is forced to take you in. You could try the famous EDF  and Octopus who might take new customers.

It was even warned about exactly this scenario, that at the end of the fixed tariff you might be stuck with Green Energy UK. Maybe in a different context, but same scenario of finding a new supplier who offers SVT.

Easy mate. I did know the risks when I signed up. I still do. But I'm always looking for more information to be able to make better informed decisions. I would hope that should a prices cap be frozen or reduced then I would also have the option of switching to a provider who offers SVT. We'll see.

Seems unlikely that the Tories will go down this route anyway, at least not straightaway. Obviously they'll act at the last possible minute and only when they absolutely have to. They always do.

Precisely this - and hence why I said that any freezing of the cap at the current level now would need to be accompanied with the energy suppliers being "encouraged" to accept switchers to the SVR. In fairness, if any shortfall is being made up then it shouldn't take much to incentivise them - as after all it gives them the chance of gaining a new longer term customer as relatively low impact on their business. 

Also - the risk of getting stuck with Green at a later date when savings have already been made is rather different to the risk of being stuck with them now, when not only have no savings been made, but additional spending has been committed to! 

savers_united

Ultrasonic said:

Are you CERTAIN about the point in bold. I asked about this above as I'm not. @What@What_time_is_it gives a relatively rare example but I'm not sure more widely either. Note that exit fees of a few hundred pounds have been increasingly common too.

In terms of the 'gamble' aspect I think there is a big distinction between people making an informed decision based on available information, and potentially the government ripping up it's own rules re. the price cap. Do you recall anyone anywhere warning people about this possibility when offering advice to others on whether to consider a fixed tariff or not? I don't.

They have ripped it up already by changing from 6 to 3 months, the cap was viewed as a fix for 6 months and no doubt many stayed on the SVT for that very reason, rather than move to an actual fixed deal, but will now face 2 rises during the winter season at short notice and when the best fixes have been pulled..

There is no easy way, if something changes then where do you draw the line, with the vast majority of UK households now on the energy cap it's overall effect will be positive, those left will be on fixed or other variable type smart tariffs. These are in the minority and will be a mix of below price cap fixed deals and others who may be coming to the end of their fixes shortly.

So in percentage terms those negatively affected will be very small, and even then may still be better off over the longer term.

For Info I have been on a fixed electric Go tariff for 2 months with a peak 35p per kwh. 

savers_united

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.

Ultrasonic

savers_united said:

They have ripped it up already by changing from 6 to 3 months, the cap was viewed as a fix for 6 months and no doubt many stayed on the SVT for that very reason, rather than move to an actual fixed deal, but will now face 2 rises during the winter season at short notice and when the best fixes have been pulled..

I don't really see that as equivalent. The principle remains intact.

savers_united said:

There is no easy way, if something changes then where do you draw the line, with the vast majority of UK households now on the energy cap it's overall effect will be positive, those left will be on fixed or other variable type smart tariffs. These are in the minority and will be a mix of below price cap fixed deals and others who may be coming to the end of their fixes shortly.

So in percentage terms those negatively affected will be very small, and even then may still be better off over the longer term.

I'm not sure the point in bold is accurate. As I believe I posted above, the last poll here showed a 70:30 split in favour of those on fixed tariffs. I've not seen recent data for the population as a whole though. Have you?

In terms of 'drawing a line' my point would be that the fixed tariff issue can't simply be ignored. Off the top of my head I think the government covering exit fees and mandating energy suppliers to allow a transfer to the SVT with them if a customer wishes would probably be the best option. Trying to address charges above previous price caps probably would be a step too far. In the first instance though I'd be interested to hear if/how the likes of Kier Starmer think this should be addressed.

The_Green_Hornet

The Labour proposal benefits the rich and the wasteful and is no better than a universal payment to all electricity account holders, plus the windfall tax, though popular with the uninformed public, won't generate anywhere near the amount of money to cover the policy so it will have to be borrowed.

In my personal opinion, any extra money would be far better targeted at those who really need it.

njm123

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.

If Boris was still PM he'd pinch the idea, new PM not so sure as they my want to be seen not act like Boris.

Only reason I think there is a slight chance it could happen under Truss is that's it's the proposal that's least beneficial to me and that sums up her policies in general.  

jak22

Despite the comments suggesting anyone taking a fix was taking a risk it is unfair for the proposals to ignore everyone on a fixed deal and assume everyone will benefit from a freeze at April 2022 cap prices - with only pre-payment needing something extra.

They should recognise that many took a fix this year and have been paying at rates higher than April cap believing the cap would be updated in October and many deals have quite high exit fees. 

So if the idea is that everyone is better off under these proposals then exit fees need to be written off or something similar.