Starmer cap freeze £10bn shortfall ?

pochase

But that is exactly the problem. Their plan needs the cap to below the £2000 mark for quite a while, while it is more likely that it will never again go below the £2000.

In other words it is back to taxes as the they government to co-sign the loans, and pay for them if the customers won't because the cap stays to high.

QrizB

pochase said:

But that is exactly the problem. Their plan needs the cap to below the £2000 mark for quite a while, while it is more likely that it will never again go below the £2000.

The CI long term forecasts are that the cap *will* go back below £2000pa.

What makes you so sure it won't?

pochase

What is long term? And how much below £2000?

If they keep the price on a £2000 level how long will it be before the price will be below the £2000 mark, and money for the loan will be repaid? And how login will it be until it goes back to £2000 and higher. Prices tend to go up and not down.

I am  not saying that it will not come down, but at the moment looking at the forecasts for 2023 I don't see a chance, maybe 2024, and that will also depend on things like what happens with Russia/Ukraine and gas.

I was just watching news regarding the German finance help for gas whole sale suppliers. Just the biggest one Juniper has made a loss of 12 billion Euro this year, current loss is 50 to 60 million Euro per week. The 2.4 cent German gas customer will pay from October most likely will not be enough, they are already talking about the possibility that it can go to the agreed maximum of 5 cent. 

Chrysalis

He would have been much better proposing a social tariff or a tiered freeze, so only the first X amount of units are frozen, would have been considerably cheaper and still favoured poorer people whilst also providing 'some' help for the wealthier.

Keir, has lost ground recently, Labour did well to get the cost of living payments done, it was a very good idea.  But they have since changed stance, and are now obsessed with trying to keep traditional tory voters happy so they swung to this idea because of its broad coverage.

The issue with the idea is its very expensive for just 6 months of help, and lots of people who dont need the help will still get it, so is a lot of wasted money.  There needs to be a degree of targeting.

To top it off he in an interview said this was good money spent but then refused to commit to spending on energy ownership which would be a longer term solution.

Chrysalis

.Dolor said:

There is a more robust plan on the table where Government money is not directly involved. Centrica (BG) and Octopus have suggested that prices should be frozen at the present Ofgem Cap for 2 years. The suppliers would take out a commercial loan - underwritten by Government - which suppliers would draw on to recover lost income. 

When energy prices fall, suppliers would not pass on the savings. These would be used to repay the loan.

In my opinion, this could prove to be popular with politicians as it involves no public money. It would have an impact inflation which a 6 month Cap wouldn’t. Moreover, it would enable Government to provide extra support to the vulnerable; to the care sector; to small businesses all of whom are badly impacted by high energy prices/inflation. The plan was discussed at the Ministerial meeting last week.

So far, neither PM candidate has come up with any plan which - as the Army would put it - would withstand the first contact with the enemy.

Not heard of this plan in the news, nowhere on the bbc website, do you have a link?

Its a buy now pay later, the two obvious issues are that if prices never fall below the current cap the government will clearly pay for this anyway but later down the line, and if prices do drop we end up paying more to pay the loan back.  I suspect this would be added to SC rather than unit rates which would penalise light users.  I think government paying the loan later is my preferred way of recovering as its via taxation, you can push the burden more on those with the ability to pay.

However this plan is definitely better than doing nothing, I also like the fact its for 2 years so those who fixed could unfix with certainty its a sound decision for the 12 months (whilst Keir's 6 month plan makes things really awkward for a decision to unfix), if this October cap does in and we follow Truss plan (which is basically no help to the poor), we all in for a shock.

Again though they should do a tiered pricing, so its cheaper for lower usage, the money will go further and it will encourage reducing energy wastage.  Instead there seems to be a preference to make energy less value for low usage.

I agree this might be something the government would support, as you said in the short term its a way to provide relief without government spending.  Although the poor will still need help as they already cant afford the April cap.

Already iceland are doing loans for food.

Check this video out. The future of the UK if we dont provide relief. Not for children, not pleasant viewing.

(Video removed by Forum Team)

sienew

Chrysalis said:

I agree this might be something the government would support, as you said in the short term its a way to provide relief without government spending.  Although the poor will still need help as they already cant afford the April cap.

Except this is exactly like the £200 loan-not-loan offered before which proved to be an incredibly controversial - even hated - policy that almost nobody liked and was quickly swapped for a £400 gift. Rich and poor alike didn't like it. I think most people feel uncomfortable doing what is essentially a buy-now-pay-later program for day to day living costs like energy.

I suspect the new govt will want a win and it's hard to see this being a popular policy, especially among Conservative voters.

Chrysalis

sienew said:

Chrysalis said:

I agree this might be something the government would support, as you said in the short term its a way to provide relief without government spending.  Although the poor will still need help as they already cant afford the April cap.

Except this is exactly like the £200 loan-not-loan offered before which proved to be an incredibly controversial - even hated - policy that almost nobody liked and was quickly swapped for a £400 gift. Rich and poor alike didn't like it. I think most people feel uncomfortable doing what is essentially a buy-now-pay-later program for day to day living costs like energy.

I suspect the new govt will want a win and it's hard to see this being a popular policy, especially among Conservative voters.

Conservative voters want policies that dont cost money and win votes, given most voters dont research, dont understand things, this is the sort of policy I can see them jumping on, its a kicking the can down the road policy which is perfect for a government that doesnt want to spend money on anything other than vanity projects and tax cuts.

Most voters wont see this as a loan as they simply dont bother reading the details.

What do you think the government will see as a win? take into account they wont want to spend money on it during this term.