We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The new Energy price ceiling of £2,500 - some questions on reflection about winners and losers.
sleekitwan
Posts: 11 Forumite
in Energy
Just kicking about some ideas, based on a bit of number-crunching I was doing as I couldn’t sleep - an absolutely constant issue for obvious reasons to do with money.
Scenario One
This is the obvious one, for a lot of households, if we simply take it that say £1200 was your cost last year-ish for home energy, and say you make a projection, we’ll assume accurate, that you may well spend say £2,400 this coming 12 months beginning 1st October 2022…
So, what’s the actual importance even to someone poor, of saving £100? I mean, we have never been profligate and have energy cost arguments dating back a decade, never mind this year or even in fact, last year was bad enough (I have arthritis, it is worse and more painful in the cold, debilitating is a good description).
Is it kind of obvious, that if the max saving we could possibly make, with me literally in pain and becoming more stiff and immobilised due to wrapping up in blankets a lot of the time, or staying in bed more, is say £200 - shaving £100 off our expected energy cost - and it’s not worth it?
So it seems VITAL people make their projections, and be as accurate as possible, because if like us you expect to be darned near the limit then you can stop half-freezing to death if all it’s doing is saving you what amounts to less than the standing charges add up to (ours are 75p per day approximately as we end September - yes, the supplier is winding it past what they will be allowed to charge come 1st October!). £200 is a notable amount of money, but being immobile and unproductive and not drying the damp clothes properly, or showering sufficiently, etc, is a massive essential need that for £200 of savings, I will forget bothering with even despite our dire circumstances.
Scenario Two
This too, is kind of obvious but I am just putting it out there for discussion - what about the relative benefit to people with a large property, that ordinarily would have been in the £2,000 bracket, even before the price hikes? That’s probably a 2-storey band D property with 4 bedrooms and average insulation? In other words, not what we’d call noticeably rich.
Not in the way Edwina Currie that Martin had a face-to-face with on ‘Good Morning’ the other week, she admitted she paid a bill of £6,000 for goodness sake. Now, here’s my kind of obvious observations:
a) the kind of ordinary+ band D I spoke of, it won’t pay them to save or even try to save money on home energy this year, surely. If they came in at say £1,700 to £2,000 annual energy cost before this all blew up in the spring, they are already past the energy ceiling of £2,500. So they could spend and not worry?
b) the Edwina case, she’s headed to £12,000 if not for this energy ceiling, for her annual energy bill.
SUMMARY & THOUGHTS
Based on these two main scenarios, and I am just thinking out loud, although I heard Martin say, the way it will work will mean higher users still pay more, I am intrigued by that for several reasons.
First, there’s nothing to say that higher-energy users will have to pay pro-rata. But even if they were, this next point still applies.
What I am getting at is simple: I think Edwina Currie is going to get an awful lot of help, and meanwhile my own household’s energy costs in effect, have been fully permitted to rocket to 100% inflation, unimpeded.
We are very likely to come in, just a smidgeon below the £2,500 if I comprehend in any way this proposed energy ceiling. So we won’t save a thing, except, the massive £5,000 bill we were on track to pay, is averted.
BUT the Edwina Currie type home, or even the ‘normal+’ 4-bed scenario I spoke of, are definitely going to have money saved.
We are going to experience, fully a doubling of our energy bill as of 1st October, on our income of less than £15,000, and we have a mortgage still to pay, so get no help there, and that’s going to be shoved up by the Bank of England’s interest rates, inexorably heading to 6 or 7% this time next year. To stop people not like us, from spending as much apparently.
Edwina at the other end of the scale, surely must be going to be saved a predictably high sum. She was on a bill 4x ours at least, in ‘normal’ times. Her bill must be limited somehow, and if we extrapolate, then her pro-rata ‘energy ceiling’ would be 4x ours, ie her energy cost limited by the govt to £10,000 (ie 4x £2,500, 4x ours).
But why do I have the feeling, this is NOT how it’s going to work?
And even if it did work like this - pro rata I term it - Edwina would save £2,000 ! And yet, she’s still going to be paying out according to this model, £4,000 MORE than before.
I just cannot see this government letting their voters have to pay that, is what I am saying. It’s the worst case, and under this worst case, a person with such a large and leaky home that uses £6,000 of home energy normally per annum, will be saved, two grand. We will not save a penny by the government intervention, merely not be subjected to the astronomic ‘free-market’ level that until a week ago was on track to hit.
We are on UC - I filled in 400 screens to get between £23 and £43 per month. Despite which, we are not to receive a penny of the £650 promised, never mind misreporting that made it sound as a couple we were entitled to two lots of £650 . I will fight this obviously, because it was blocked for us based on a tiny pay rise of a percent for my spouse, all being dropped on her paypacket, right in the month Sunak chose as the ‘assessment period’. Thereby those of us daring to work in spite of not much pay or bad health, were I think treated differently to those on say, benefits completely, that maybe were overcalculated. IE I am certain overcalculated benefits would have been fixed, and pulled out of that month’s UC assessment.
That’s what happens when you use a system in a way it was not designed for, and then resign before fixing it. In fact he knew exactly that this would happen, all in advance.
All of this, comes on top of the DWP pulling my PIP over a year ago, then saying it was a mistake, reinstating it ‘as if nothing had happened’ they said, and sadly as I warned the DWP, the Council refused to acknowledge the concept of ‘reverting’ and have made us fight after quadrupling our effective Council Tax bill.
To recap - we got no COVID money, for furlough, okay, we got the disease because our family worked in a Care Home, and none are self-employed, ok that’s how that went. No average of £6,000 nearly for us. I have no complaint on that. We got ill, we worked through it as much as permitted, fine.
Then there’s the Cost Of Living assistance, deliberately setting it at a strangely short assessment period, is suddenly explained, it cut off probably half a million working poor whose paypackets had an odd end of year adjustment. So, no £650 for us, ok. I thought there were ‘unique’ cases to be ‘worked through’ according to Sunak, but hey, we have another Chancellor, hey hoe.
Now we have the clincher, the thing that might sink us. Somebody has decided, a nice middle-class family can probably manage to pay £2,500 a year for home energy. That’s marvellous. They could have set the number higher for more wealthy people, and lower for the worse off, but no. I have a feeling, the opposite will happen. The better-off, the high energy users, will actually save money compared to if the govt had not stepped in, and if it is not even pro-rata, they will save more.
WINNERS AND LOSERS
In the last 18 months, if you were a tradesman with a track record of taxes paid, you’d have furloughed and averaged £6,000 from the government.
If you were solely on benefits that don;t vary like Universal Credit/UC does for part-time workers, you likely have got the £650 COL.
If you have higher energy bills than average, the strange ‘moving-ceiling’ price cap or limit thing, will save you at least some money.
If the DWP did NOT remove your PIP, then replace it apologising and saying it was a mistake (after we were taken to court and criminally charged with non-payment and found guilty), you didn’t get your Council Tax Benefit almost fully removed.
The top two, I wouldn’t give a fig about, except for the cost to us in the last 12 months, that the bottom two have made. Annually, never mind the rest of inflation, the fact an electric vehicle now is pointless unless you turn your home into a power station first, our Council Tax asks £1400 more of us than before the DWP made their self-proclaimed ‘mistake’, and now we get a doubled energy bill. That’s almost £1300 more compared to 12 months ago.
REAL MONEY
Never mind a billion here and there becoming real money - we on less than fifteen grand deep into our fifties with health issues I wouldn’t wish on a dog, are being told, nay threatened with court if we don’t pay, will need to cough up £2,700 a year MORE than last year in April the numbers were.
I just want people to think about what that means - a hike in costs, completely separate to petrol and general inflation, of what amounts to almost a fifth or 20% of our complete income for a year.
How could anyone out there, afford a 20% extra ‘ask’ at this time? On the average salary of £30k or so, that’d be SIX GRAND. I don’t believe anybody on a household income of less than fifty grand, could stand the pain of a 20% extra ask, without moving home, and down-sizing.
And to get put in this position, all that had to happen was :
- the DWP made a mistake they admitted to 12 months later
- the Council decide that ‘Council Tax Benefit’ is a ‘legacy benefit’ in law, even though it isn’t because they still pay it (! that’s the only way UC can be involved, and the council say us getting UC is the reason C Tax help was dropped), and the reason is therefore completely bogus ie the council are opportunistic, saw an excuse and took it, despite the reason being completely baseless
- the government of the day, decide ‘free market’ is too important an ideal, to be troubled with taxation, or emergency legislation to be used on Big Oil & Gas to avoid free-market inflation (we did for coronavirus), and decide that poor people will be fine paying 100% more for energy
None of the above, is in our hands.
I genuinely am concerned at what kind of person I will become by the end of this next year.
Anyone out there who is fit and well, please remember, one day we all get unfit and unwell, it is inevitable. If we exempt the likes of a ‘James Dean’ situation.
The Council did not have to decide to quadruple our bill, yet not charge a penny more for band ‘D’ properties that double in size (true fact), and the DWP do not need to have a policy of ‘turning over’ every single claimant on some kind of cycle, thus leading to the ‘mistake’ they made and the opportunity created for the council tax department to pull most of their assistance in the 12 months of the PIP being absent.
And Rishi Sunak did not have to make a stupidly short assessment period of one single month of UC, to decide if £650 was paid out or not.
That’s it. I bet there are folks out there on £40k per annum, who would feel faint if they were asked to fork out the £2,700 we are to have to find extra this year. Maybe people on double that, if my friend in a household of £90k is anything to go by.
This govt has decided to let the cards fall how they may, for the lower-paid or working-age ill of this country. On the back of a week where we have in effect had two ‘coronations’, one for the Monarchy, and the one just before, for the Prime Minister, it’s a rum do.
My best to all, take care, and be at peace.
irm
fri 16th sep 2022.
Scenario One
This is the obvious one, for a lot of households, if we simply take it that say £1200 was your cost last year-ish for home energy, and say you make a projection, we’ll assume accurate, that you may well spend say £2,400 this coming 12 months beginning 1st October 2022…
So, what’s the actual importance even to someone poor, of saving £100? I mean, we have never been profligate and have energy cost arguments dating back a decade, never mind this year or even in fact, last year was bad enough (I have arthritis, it is worse and more painful in the cold, debilitating is a good description).
Is it kind of obvious, that if the max saving we could possibly make, with me literally in pain and becoming more stiff and immobilised due to wrapping up in blankets a lot of the time, or staying in bed more, is say £200 - shaving £100 off our expected energy cost - and it’s not worth it?
So it seems VITAL people make their projections, and be as accurate as possible, because if like us you expect to be darned near the limit then you can stop half-freezing to death if all it’s doing is saving you what amounts to less than the standing charges add up to (ours are 75p per day approximately as we end September - yes, the supplier is winding it past what they will be allowed to charge come 1st October!). £200 is a notable amount of money, but being immobile and unproductive and not drying the damp clothes properly, or showering sufficiently, etc, is a massive essential need that for £200 of savings, I will forget bothering with even despite our dire circumstances.
Scenario Two
This too, is kind of obvious but I am just putting it out there for discussion - what about the relative benefit to people with a large property, that ordinarily would have been in the £2,000 bracket, even before the price hikes? That’s probably a 2-storey band D property with 4 bedrooms and average insulation? In other words, not what we’d call noticeably rich.
Not in the way Edwina Currie that Martin had a face-to-face with on ‘Good Morning’ the other week, she admitted she paid a bill of £6,000 for goodness sake. Now, here’s my kind of obvious observations:
a) the kind of ordinary+ band D I spoke of, it won’t pay them to save or even try to save money on home energy this year, surely. If they came in at say £1,700 to £2,000 annual energy cost before this all blew up in the spring, they are already past the energy ceiling of £2,500. So they could spend and not worry?
b) the Edwina case, she’s headed to £12,000 if not for this energy ceiling, for her annual energy bill.
SUMMARY & THOUGHTS
Based on these two main scenarios, and I am just thinking out loud, although I heard Martin say, the way it will work will mean higher users still pay more, I am intrigued by that for several reasons.
First, there’s nothing to say that higher-energy users will have to pay pro-rata. But even if they were, this next point still applies.
What I am getting at is simple: I think Edwina Currie is going to get an awful lot of help, and meanwhile my own household’s energy costs in effect, have been fully permitted to rocket to 100% inflation, unimpeded.
We are very likely to come in, just a smidgeon below the £2,500 if I comprehend in any way this proposed energy ceiling. So we won’t save a thing, except, the massive £5,000 bill we were on track to pay, is averted.
BUT the Edwina Currie type home, or even the ‘normal+’ 4-bed scenario I spoke of, are definitely going to have money saved.
We are going to experience, fully a doubling of our energy bill as of 1st October, on our income of less than £15,000, and we have a mortgage still to pay, so get no help there, and that’s going to be shoved up by the Bank of England’s interest rates, inexorably heading to 6 or 7% this time next year. To stop people not like us, from spending as much apparently.
Edwina at the other end of the scale, surely must be going to be saved a predictably high sum. She was on a bill 4x ours at least, in ‘normal’ times. Her bill must be limited somehow, and if we extrapolate, then her pro-rata ‘energy ceiling’ would be 4x ours, ie her energy cost limited by the govt to £10,000 (ie 4x £2,500, 4x ours).
But why do I have the feeling, this is NOT how it’s going to work?
And even if it did work like this - pro rata I term it - Edwina would save £2,000 ! And yet, she’s still going to be paying out according to this model, £4,000 MORE than before.
I just cannot see this government letting their voters have to pay that, is what I am saying. It’s the worst case, and under this worst case, a person with such a large and leaky home that uses £6,000 of home energy normally per annum, will be saved, two grand. We will not save a penny by the government intervention, merely not be subjected to the astronomic ‘free-market’ level that until a week ago was on track to hit.
We are on UC - I filled in 400 screens to get between £23 and £43 per month. Despite which, we are not to receive a penny of the £650 promised, never mind misreporting that made it sound as a couple we were entitled to two lots of £650 . I will fight this obviously, because it was blocked for us based on a tiny pay rise of a percent for my spouse, all being dropped on her paypacket, right in the month Sunak chose as the ‘assessment period’. Thereby those of us daring to work in spite of not much pay or bad health, were I think treated differently to those on say, benefits completely, that maybe were overcalculated. IE I am certain overcalculated benefits would have been fixed, and pulled out of that month’s UC assessment.
That’s what happens when you use a system in a way it was not designed for, and then resign before fixing it. In fact he knew exactly that this would happen, all in advance.
All of this, comes on top of the DWP pulling my PIP over a year ago, then saying it was a mistake, reinstating it ‘as if nothing had happened’ they said, and sadly as I warned the DWP, the Council refused to acknowledge the concept of ‘reverting’ and have made us fight after quadrupling our effective Council Tax bill.
To recap - we got no COVID money, for furlough, okay, we got the disease because our family worked in a Care Home, and none are self-employed, ok that’s how that went. No average of £6,000 nearly for us. I have no complaint on that. We got ill, we worked through it as much as permitted, fine.
Then there’s the Cost Of Living assistance, deliberately setting it at a strangely short assessment period, is suddenly explained, it cut off probably half a million working poor whose paypackets had an odd end of year adjustment. So, no £650 for us, ok. I thought there were ‘unique’ cases to be ‘worked through’ according to Sunak, but hey, we have another Chancellor, hey hoe.
Now we have the clincher, the thing that might sink us. Somebody has decided, a nice middle-class family can probably manage to pay £2,500 a year for home energy. That’s marvellous. They could have set the number higher for more wealthy people, and lower for the worse off, but no. I have a feeling, the opposite will happen. The better-off, the high energy users, will actually save money compared to if the govt had not stepped in, and if it is not even pro-rata, they will save more.
WINNERS AND LOSERS
In the last 18 months, if you were a tradesman with a track record of taxes paid, you’d have furloughed and averaged £6,000 from the government.
If you were solely on benefits that don;t vary like Universal Credit/UC does for part-time workers, you likely have got the £650 COL.
If you have higher energy bills than average, the strange ‘moving-ceiling’ price cap or limit thing, will save you at least some money.
If the DWP did NOT remove your PIP, then replace it apologising and saying it was a mistake (after we were taken to court and criminally charged with non-payment and found guilty), you didn’t get your Council Tax Benefit almost fully removed.
The top two, I wouldn’t give a fig about, except for the cost to us in the last 12 months, that the bottom two have made. Annually, never mind the rest of inflation, the fact an electric vehicle now is pointless unless you turn your home into a power station first, our Council Tax asks £1400 more of us than before the DWP made their self-proclaimed ‘mistake’, and now we get a doubled energy bill. That’s almost £1300 more compared to 12 months ago.
REAL MONEY
Never mind a billion here and there becoming real money - we on less than fifteen grand deep into our fifties with health issues I wouldn’t wish on a dog, are being told, nay threatened with court if we don’t pay, will need to cough up £2,700 a year MORE than last year in April the numbers were.
I just want people to think about what that means - a hike in costs, completely separate to petrol and general inflation, of what amounts to almost a fifth or 20% of our complete income for a year.
How could anyone out there, afford a 20% extra ‘ask’ at this time? On the average salary of £30k or so, that’d be SIX GRAND. I don’t believe anybody on a household income of less than fifty grand, could stand the pain of a 20% extra ask, without moving home, and down-sizing.
And to get put in this position, all that had to happen was :
- the DWP made a mistake they admitted to 12 months later
- the Council decide that ‘Council Tax Benefit’ is a ‘legacy benefit’ in law, even though it isn’t because they still pay it (! that’s the only way UC can be involved, and the council say us getting UC is the reason C Tax help was dropped), and the reason is therefore completely bogus ie the council are opportunistic, saw an excuse and took it, despite the reason being completely baseless
- the government of the day, decide ‘free market’ is too important an ideal, to be troubled with taxation, or emergency legislation to be used on Big Oil & Gas to avoid free-market inflation (we did for coronavirus), and decide that poor people will be fine paying 100% more for energy
None of the above, is in our hands.
I genuinely am concerned at what kind of person I will become by the end of this next year.
Anyone out there who is fit and well, please remember, one day we all get unfit and unwell, it is inevitable. If we exempt the likes of a ‘James Dean’ situation.
The Council did not have to decide to quadruple our bill, yet not charge a penny more for band ‘D’ properties that double in size (true fact), and the DWP do not need to have a policy of ‘turning over’ every single claimant on some kind of cycle, thus leading to the ‘mistake’ they made and the opportunity created for the council tax department to pull most of their assistance in the 12 months of the PIP being absent.
And Rishi Sunak did not have to make a stupidly short assessment period of one single month of UC, to decide if £650 was paid out or not.
That’s it. I bet there are folks out there on £40k per annum, who would feel faint if they were asked to fork out the £2,700 we are to have to find extra this year. Maybe people on double that, if my friend in a household of £90k is anything to go by.
This govt has decided to let the cards fall how they may, for the lower-paid or working-age ill of this country. On the back of a week where we have in effect had two ‘coronations’, one for the Monarchy, and the one just before, for the Prime Minister, it’s a rum do.
My best to all, take care, and be at peace.
irm
fri 16th sep 2022.
0
Comments
-
A very long text, and I stopped reading in the middle because you got it completely wrong.
The £2500 is not the maximum that is paid for energy, it is the maximum for the "average user" using 12000KWh gas and 2900KWh electricity. From this figure the maximum unit rates are calculated.
Taking your own figure of £1200 last year you would have paid over £3000 from October, maybe £4000 from January, so your saving is not £100, but almost £1000.
Somebody who paid £6000 last year, will now pay £11000, and yes save several thousand pound.13 -
Correct, but many people seem to have assumed it was an all-you-can-eat buffet. Guess the explanation wasn’t as clear as I thought.pinkteapot said:Yeah, I assumed the maximum was a maximum per kwh, rather than an absolute total bill? And that for the average household that cap would mean an annual bill of £2500...4 -
I sense some posters want all charges to be related to income. So you show your P60 at the petrol station and higher rate taxpayers get charged more per litre, your energy supplier charges more per unit kWH if you're earning more than £100k etc. Ultimately it just wouldn't pay to work.
3 -
The problem is that some posters are thinking about the micro situation (individual households) when the government has to think of the macro situation, and a solution that could be implemented quickly.
This is essentially a re-distribution of wealth from future taxpayers to today's households. There will be winners, there will be losers. The biggest loser is my neighbour's sixteen year old son, who won't see a penny of this support but will be paying it back either through his taxes or through cuts to future public spending for years to come.
We should remember that this is a Conservative government. They are naturally opposed to 'handouts' so ideologically a system where everyone benefits will be seen as fairer.
Individuals should not worry about the fact that Edwina Currie (or whoever) is also saving money. They should just look at their own situation, and sadly may have to look for ways to cut back if the government help isn't sufficient.
As a high earner, I don't really need any government help. But I'll have more disposable income, some of which will be spent in local businesses, supporting other peoples' livelihoods. If you think about the macro rather than the micro, the government's approach seems more logical.10 -
The cap is on the amount per unit and the £2500 is an example for some notional typical household.Think of it as a discounted price on Mars bars, normally £1 but with a 50p discount.Buying at the normal price:
- If you buy 1 it costs you £1.
- If someone buys 2 it costs them £2.
- If someone else buys 10 it costs them £10.
Buying at the discounted price:- If you buy 1 it costs you 50p.
- If someone buys 2 it costs them £1.
- If someone else buys 10 it costs them £5.
So, the person who buys 10 is still paying 10x what you're paying.There are no winners or losers - everyone is still paying proportionally the same.
3 -
...but if you are able to cut back on your Mar's Bar habit, you are definitely a winner!
2 -
Arh as my husband earns let than me and is a "Mid earner" v's me who is a "Higher earner" .... does that mean i should put all the bills in his name and send him for petrol and shopping?! i mean im totally cool with this :P .... well i am untill all we have to eat/drink is potnoodles and monster energy drinksMiser1964 said:I sense some posters want all charges to be related to income. So you show your P60 at the petrol station and higher rate taxpayers get charged more per litre, your energy supplier charges more per unit kWH if you're earning more than £100k etc. Ultimately it just wouldn't pay to work.
hehe ....- May 2021 Grocery Challenge : £198.72 spent / £300 Budget
- June 2021 Grocery challenge : £354.19 spent / £300 Budget
1 -
The losers are those who have to pay for it in the future, the winners are those who do not.prowla said:The cap is on the amount per unit and the £2500 is an example for some notional typical household.Think of it as a discounted price on Mars bars, normally £1 but with a 50p discount.Buying at the normal price:- If you buy 1 it costs you £1.
- If someone buys 2 it costs them £2.
- If someone else buys 10 it costs them £10.
Buying at the discounted price:- If you buy 1 it costs you 50p.
- If someone buys 2 it costs them £1.
- If someone else buys 10 it costs them £5.
So, the person who buys 10 is still paying 10x what you're paying.There are no winners or losers - everyone is still paying proportionally the same.1 -
You can also make the case that the capping of unit rates is also "unfairly" benefitting people who have chosen to live in the colder parts of the UK. Users of power to heat a cottage in Caithness will enjoy a larger subsidy in cash terms then a homeowner in Cornwall where it rarely freezes.
Someone will always feel they've been left with the thin end of the wedge0 -
MattMattMattUK said:
The losers are those who have to pay for it in the future, the winners are those who do not.prowla said:The cap is on the amount per unit and the £2500 is an example for some notional typical household.Think of it as a discounted price on Mars bars, normally £1 but with a 50p discount.Buying at the normal price:- If you buy 1 it costs you £1.
- If someone buys 2 it costs them £2.
- If someone else buys 10 it costs them £10.
Buying at the discounted price:- If you buy 1 it costs you 50p.
- If someone buys 2 it costs them £1.
- If someone else buys 10 it costs them £5.
So, the person who buys 10 is still paying 10x what you're paying.There are no winners or losers - everyone is still paying proportionally the same.
Well yes, but you know what I meant... :-)
0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.2K Spending & Discounts
- 245.1K Work, Benefits & Business
- 600.7K Mortgages, Homes & Bills
- 177.5K Life & Family
- 258.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards