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£2500 Price Cap Martin's view

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Comments

  • sienew
    sienew Posts: 334 Forumite
    100 Posts Name Dropper
    TheBanker said:

    I will benefit from any price freeze and from the £400 payment, but my 'benefit' will be a higher savings account balance than if I didn't receive the government help.
    But will it?

    The government help is a government backed loan to the energy companies that must be repaid. Reports on how that will happen are still conflicting but it's expected to be either through higher taxation or added to energy bills for the next 10-20 years.

    So yeah, the govt might give you £2,000 in help this year but you (as a middle earner) will almost certainly end up repaying that money back over time with interest.

    Giving people a loan isn't really helping them*.

    *if repaid by taxation lower earners will benefit as they don't pay high taxes (theirs would be repaid by the rich) but as a middle earner you'll probably see no real financial advantage over the next 10 years as it's repaid
  • sienew said:
    Robgmun said:
    "The big benefit, and problem, of this is (almost) everyone gets it."

    Mr Lewis has been heroic and I think he's great, but It's phrases like this that get my goat, why shouldn't I benefit? I worked my behind off my whole life and Middle-income workers like me have been shafted lately and watching on the sidelines as those who are considered poor and on benefits get handout after handout after handout.

    Without the price cap freeze my bills would have gone up from £97 a year ago to over £550 by next April, that's crippling to us and 10,000's of families across the country. Unless of course, the plan is to destroy the middle and make everyone poor and on benefits.
    As a middle earner you will almost certainly end up paying the money back, plus interest, either through energy bills or taxation.

    Helping the poorest 20% who will by far struggle most doesn't cost 20% of the cost of this package, it costs more like 10% as they tend to be much lower users, smaller houses, less appliances, already cut back a lot just due to being poor. This means the amount repaid would be MUCH MUCH lower and would be almost unnoticeable on most bills.

    The argument can be made for middle earners this isn't really help but a buy now pay later scheme.

    Generally how taxation works is that the very rich pay for the very poor. Middle earners pay for themselves. This means if this is added to either taxation or your bill you will end up paying this money back. That brings up the question... is this help at all? Or is it just essentially a buy now pay later scheme for middle earners? And like many middle earners here have argued, they would rather pay an extra £2,000 a year on their bill this year (with reduced usage this might be cut down to say £1500) than pay an extra £210 a year for the next 10 years. And what happens in 18 months if prices haven't gone down?
    Less than a third of working age (18-67) people make a net contribution in any one year, for a lifetime net contribution it is under 10% for people born in the UK (slightly higher for people who came to the country as adults due to lack of education costs). High earners (the top 1% of earners pay more than a third of all income taxation) and businesses fund the vast majority of the UK population. 
  • MattMattMattUK
    MattMattMattUK Posts: 11,607 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 7 September 2022 at 12:48PM
    sienew said:
    Anyone worried about the future cost and "paying it back" should consider the future without the cap. Those people you think shouldn't get help will have less money to spend. Businesses will go under very quickly with the double whammy of higher energy prices and no disposable income.
    But is the energy price going to be significantly cheaper in 18 months? The current predicted peak is £6,616, we would need to fall 68% in the 12 months following that to get back to this frozen level.

    The question is... are we just delaying the inevitable at an incredible cost that probably FAR exceeds £100 BILLION. It's highly likely that we find ourselves at or above the October cap in 18 months anyway, that still would require an almost 50% drop in prices in the 12 months following April 2023.
    My gut feeling is that we will end up with a permeant energy subsidy, funded from general taxation, probably with the "cap" rising with inflation in future years, or possibly a inflation plus methodology. 
    sienew said:
    And we need to invest in green energy and nuclear. We need to be self sufficient.
    An additional question is, if we are just delaying the price rises for 18 months aren't we maybe better investing that £100,000,000,000 in energy self sufficiency that won't last 18 months but would last closer to 50 years and probably set us up with cheaper and more secure energy for at least the next 100 years.

    As an example you could build 4 Hinkley Point C's for £100B, each expected to supply 7% of the UK's energy needs. The expected lifetime is at least 60 years. And this isn't even our cheapest form of energy production. Our country could become energy self sufficient for generations for the cost of an 18 month support package.

    *100B is the base package predictions in the media, the full package to consumers seems to be closer to £150B and could reasonably end up being £200B. Then they are talking about support for businesses which depending on what they do possibly even take the cost to £300B.
    I agree, we also need to bring the costs down, which we could by government funding and a mass building program (5 plants/10 reactors a year initially, increasing to 20+ reactors a year for a decade or more), estimates are that if we operated a mass nuclear building program we could be installing new nuclear for around £3.4 billion per megawatt of production capacity. 
  • norsefox
    norsefox Posts: 215 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Robgmun said:
    "The big benefit, and problem, of this is (almost) everyone gets it."

    Mr Lewis has been heroic and I think he's great, but It's phrases like this that get my goat, why shouldn't I benefit? I worked my behind off my whole life and Middle-income workers like me have been shafted lately and watching on the sidelines as those who are considered poor and on benefits get handout after handout after handout.

    Without the price cap freeze my bills would have gone up from £97 a year ago to over £550 by next April, that's crippling to us and 10,000's of families across the country. Unless of course, the plan is to destroy the middle and make everyone poor and on benefits.
    Part of this is your mistaken belief that your success is entirely down to your own decisions, and those worse off have equally chosen to be there.  It's ego-centric bias.  Luck, fortune, timing, circumstance plays a monumentally big impact on how all of our lives pan out.  You can be getting 'shafted' and it still be correct and right to support those less fortunate.

    There but for the grace of God go I.
  • busybee100
    busybee100 Posts: 1,554 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    sienew said:
    Anyone worried about the future cost and "paying it back" should consider the future without the cap. Those people you think shouldn't get help will have less money to spend. Businesses will go under very quickly with the double whammy of higher energy prices and no disposable income.
    But is the energy price going to be significantly cheaper in 18 months? The current predicted peak is £6,616, we would need to fall 68% in the 12 months following that to get back to this frozen level.

    The question is... are we just delaying the inevitable at an incredible cost that probably FAR exceeds £100 BILLION. It's highly likely that we find ourselves at or above the October cap in 18 months anyway, that still would require an almost 50% drop in prices in the 12 months following April 2023.

    And we need to invest in green energy and nuclear. We need to be self sufficient.
    An additional question is, if we are just delaying the price rises for 18 months aren't we maybe better investing that £100,000,000,000 in energy self sufficiency that won't last 18 months but would last closer to 50 years and probably set us up with cheaper and more secure energy for at least the next 100 years.

    As an example you could build 4 Hinkley Point C's for £100B, each expected to supply 7% of the UK's energy needs. The expected lifetime is at least 60 years. And this isn't even our cheapest form of energy production. Our country could become energy self sufficient for generations for the cost of an 18 month support package.

    *100B is the base package predictions in the media, the full package to consumers seems to be closer to £150B and could reasonably end up being £200B. Then they are talking about support for businesses which depending on what they do possibly even take the cost to £300B.
    You keep putting ££s on different options as if they mean something. There is no alternative, a depression is on the horizon and it needs to be addressed, it will cost more if we don't invest.

    The crisis has not been caused by consumers but by mismanagement from successive governments who knew we would have a shortfall as the old powerstations went offline. (Plus Ofgem weren't regulating the Cowboys)

    It isn't either or, there needs to be both subsidies and investment.


  • sienew
    sienew Posts: 334 Forumite
    100 Posts Name Dropper
    edited 7 September 2022 at 1:21PM
    sienew said:
    Anyone worried about the future cost and "paying it back" should consider the future without the cap. Those people you think shouldn't get help will have less money to spend. Businesses will go under very quickly with the double whammy of higher energy prices and no disposable income.
    But is the energy price going to be significantly cheaper in 18 months? The current predicted peak is £6,616, we would need to fall 68% in the 12 months following that to get back to this frozen level.

    The question is... are we just delaying the inevitable at an incredible cost that probably FAR exceeds £100 BILLION. It's highly likely that we find ourselves at or above the October cap in 18 months anyway, that still would require an almost 50% drop in prices in the 12 months following April 2023.

    And we need to invest in green energy and nuclear. We need to be self sufficient.
    An additional question is, if we are just delaying the price rises for 18 months aren't we maybe better investing that £100,000,000,000 in energy self sufficiency that won't last 18 months but would last closer to 50 years and probably set us up with cheaper and more secure energy for at least the next 100 years.

    As an example you could build 4 Hinkley Point C's for £100B, each expected to supply 7% of the UK's energy needs. The expected lifetime is at least 60 years. And this isn't even our cheapest form of energy production. Our country could become energy self sufficient for generations for the cost of an 18 month support package.

    *100B is the base package predictions in the media, the full package to consumers seems to be closer to £150B and could reasonably end up being £200B. Then they are talking about support for businesses which depending on what they do possibly even take the cost to £300B.
    You keep putting ££s on different options as if they mean something. There is no alternative, a depression is on the horizon and it needs to be addressed, it will cost more if we don't invest.

    The crisis has not been caused by consumers but by mismanagement from successive governments who knew we would have a shortfall as the old powerstations went offline. (Plus Ofgem weren't regulating the Cowboys)

    It isn't either or, there needs to be both subsidies and investment.


    It could very well be argued that borrowing incredibly large amounts of money with no strategy to repay is more damaging long term than short term rising energy costs.

    I'm also not saying we shouldn't do anything. I do believe targeted support is a far better idea though.
  • Chrysalis
    Chrysalis Posts: 4,755 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 7 September 2022 at 1:24PM
    Astria said:
    Mstty said:
    Also will the freeze price per kWh only apply to the first £2500 worth of energy then it goes up to the price cap rate?
    That would cause a lot of people to think and cut back on their energy usage to try and not exceed that figure, but I fear it will be difficult to implement and confuse a lot of people, causing mass phone calls and complaints when they see their electric go up from 30p/unit to 69p/unit.
    People get very easily confused. :neutral:

    It would be a means of educating people to watch their usage and learn how energy billing works, we really should be having a tiered cap, a all you can eat cap is so wasteful.

    On that note I think in future Ofgem should make it mandatory that for all fixed DD customers, the supplier has to send them a monthly report on their usage and explain if its below or above the estimation that sets their DD level.
  • casjen
    casjen Posts: 163 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Hes busy backpedaling his advice IMO
  • michaels
    michaels Posts: 29,223 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    sienew said:
    Anyone worried about the future cost and "paying it back" should consider the future without the cap. Those people you think shouldn't get help will have less money to spend. Businesses will go under very quickly with the double whammy of higher energy prices and no disposable income.
    But is the energy price going to be significantly cheaper in 18 months? The current predicted peak is £6,616, we would need to fall 68% in the 12 months following that to get back to this frozen level.

    The question is... are we just delaying the inevitable at an incredible cost that probably FAR exceeds £100 BILLION. It's highly likely that we find ourselves at or above the October cap in 18 months anyway, that still would require an almost 50% drop in prices in the 12 months following April 2023.
    My gut feeling is that we will end up with a permeant energy subsidy, funded from general taxation, probably with the "cap" rising with inflation in future years, or possibly a inflation plus methodology. 
    sienew said:
    And we need to invest in green energy and nuclear. We need to be self sufficient.
    An additional question is, if we are just delaying the price rises for 18 months aren't we maybe better investing that £100,000,000,000 in energy self sufficiency that won't last 18 months but would last closer to 50 years and probably set us up with cheaper and more secure energy for at least the next 100 years.

    As an example you could build 4 Hinkley Point C's for £100B, each expected to supply 7% of the UK's energy needs. The expected lifetime is at least 60 years. And this isn't even our cheapest form of energy production. Our country could become energy self sufficient for generations for the cost of an 18 month support package.

    *100B is the base package predictions in the media, the full package to consumers seems to be closer to £150B and could reasonably end up being £200B. Then they are talking about support for businesses which depending on what they do possibly even take the cost to £300B.
    I agree, we also need to bring the costs down, which we could by government funding and a mass building program (5 plants/10 reactors a year initially, increasing to 20+ reactors a year for a decade or more), estimates are that if we operated a mass nuclear building program we could be installing new nuclear for around £3.4 billion per megawatt of production capacity. 
    Wouldn't 10 Hinkley Point C size reactors meet all our current electricity needs?  Even assuming we move all our gas and transport to electric as well wouldn't 30-40 be enough?  Where does 20 per year come in?
    I think....
  • Ultrasonic
    Ultrasonic Posts: 4,265 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    facade said:
    Clavas said:
    I think the best option is to waive any early exit fees for anyone signing up to a fix since 1st July.
    Why specifically the 1 July cut-off? I'd argue there should be no date threshold myself.

    Fixes went up dramatically when the pundits finally realised prices would rocket up in October, I'm not sure if this happened in July though,  the fixes were still below the rates of this £2500 cap in March, I took one.
    I took one right at the end of February which is just above the current cap and they jumped up significantly within a week. So 1 March would be a better cut off to my mind than 1 July but I'd still favour none at all.
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