MSE News: An energy social tariff could save vulnerable households up to £1,500/year on their bills

Scot_39

michaels said:

Surely it makes more sense to make benefits at the correct level and then let adults choose how they distribute their income based on their own priorities.  Energy is a great example - make it artificially cheap and people will be wasteful rather than improving insulation or putting on another sweater.

It's a nice idea but the reality is wildly different.

I don't mean to sound harsh - but the reality is many people are simply not capable of making that level of decision rationally.

My sister and partner both work in different housing associations.

When the govt decided it would stop paying housing benefit direct to landlords - but to tenants - their income dropped sharply - as people simply didn't pass the money on.

At one stage they had 100s more in rent arrears ( out of few thousands ) - slowly undergoing Court claims for debts and admin for sequestration of benefits - just to get back towards old position of "rent" direct.

And had to employ admin staff and pay legal fees and court fees

A private landlord would simply have evicted many - as many did - at the time.

And who paid for the shortfall, the internal and external staff and costs - that's right - the other tenants via rents. 

TheElectricCow

While I can get behind the idea in principle of making sure vulnerable people are properly supported, can’t say I agree with this at least not with the very limited information that’s been presented here.

The article seems to suggest the idea is to simply subsidise high users who also happen to be on low income. I think in most cases if someone is in need of a £1500 discount on their energy bill (i.e. they’re on a low income and are currently paying significantly more than that amount) it’s probably going to be more worthwhile for everyone involved to improve their energy efficiency and cut down on use before just handing out that kind of money. 

For a low user who has done all they can to reduce consumption that amount could easily pay two years worth of energy bills. Doesn’t make sense to me  that by virtue of them being a low user they should be less entitled to the payments as a high usage household on the same income who have done the financially irresponsible thing and made zero effort to decrease energy use.

Not to mention the complexity in administering such a tariff sounds like an endless source of trouble and extra costs. Suddenly HMRC and every energy supplier in the market has got to start coordinating and linking everyone’s personal data together, then work out what each person’s housing expenses are, then arrange payments to all those who are eligible, and finally will presumably have to continue to manage this on a month by month basis to ensure support payments made accurately reflect any change in circumstances across at least 12 million households. 

What they’re going for is a fine enough idea, but in reality I’m sure there are far better ways to go about it.

Spoonie_Turtle

Scot_39 said:

michaels said:

Surely it makes more sense to make benefits at the correct level and then let adults choose how they distribute their income based on their own priorities.  Energy is a great example - make it artificially cheap and people will be wasteful rather than improving insulation or putting on another sweater.

When the govt decided it would stop paying housing benefit direct to landlords - but to tenants - their income dropped sharply - as people simply didn't pass the money on.

You make the mistake of assuming benefits were set at the right level.  No doubt for many of those people, that was because the level of money left after rent was not enough to live on, so once they had more money coming in that they could use for food and other daily essentials they used it for that.  So setting benefits at a livable level would have prevented some of those cases.

Obviously not everybody, as we know some people at any income level really are just plain bad at managing money, but equally many of the best people at managing money tend to be people who've HAD to budget to the last penny, not people who've been financially comfortable all their lives.


.

The idea of a social tariff in general doesn't sit well with me, not so much the principle but the reality that many people are on a low income and do not qualify for means-tested benefits because the level of those benefits is so low.  You have people in poverty unable to claim any help because they earn just a tiny bit more than the threshold for their circumstances.  Any social tariff linked with claiming certain benefits would mean people who need it but only just don't qualify for the benefits would miss out yet again.

But in the article they talk about assessing it based on reality (rather than the government's existing dire thresholds) so it could in theory work … I don't hold out too much hope for it being implemented well, though.  It would need to be independent charities and research groups deciding on the criteria and thresholds, which I doubt the government would allow.

MattMattMattUK

Spoonie_Turtle said:

Scot_39 said:

michaels said:

Surely it makes more sense to make benefits at the correct level and then let adults choose how they distribute their income based on their own priorities.  Energy is a great example - make it artificially cheap and people will be wasteful rather than improving insulation or putting on another sweater.

When the govt decided it would stop paying housing benefit direct to landlords - but to tenants - their income dropped sharply - as people simply didn't pass the money on.

You make the mistake of assuming benefits were set at the right level.  No doubt for many of those people, that was because the level of money left after rent was not enough to live on, so once they had more money coming in that they could use for food and other daily essentials they used it for that.  So setting benefits at a livable level would have prevented some of those cases.

Obviously not everybody, as we know some people at any income level really are just plain bad at managing money, but equally many of the best people at managing money tend to be people who've HAD to budget to the last penny, not people who've been financially comfortable all their lives.


.

The idea of a social tariff in general doesn't sit well with me, not so much the principle but the reality that many people are on a low income and do not qualify for means-tested benefits because the level of those benefits is so low.  You have people in poverty unable to claim any help because they earn just a tiny bit more than the threshold for their circumstances.  Any social tariff linked with claiming certain benefits would mean people who need it but only just don't qualify for the benefits would miss out yet again.

But in the article they talk about assessing it based on reality (rather than the government's existing dire thresholds) so it could in theory work … I don't hold out too much hope for it being implemented well, though.  It would need to be independent charities and research groups deciding on the criteria and thresholds, which I doubt the government would allow.

This can be the case, the people I know who is worst at managing their finances is a couple who have a net monthly income of just shy of £7k pcm, yet they have upwards of £25k of personal debt, no savings, net they have paid nothing off their mortgage in 15 years (the remortgage to cover unsecured debts, the run up unsecured debts again), they run out of money before the end of every month etc. yet they think they are "good with money" because they have not defaulted on any payments. Those with lower incomes generally budget consistently and are far more debt averse. 

I have been in debt in the past, when I was 18-24, I worked 80-100 hours a week to pay it off (full time office job, plus bar work weekday evenings and all day shifts at the weekends) and I made the decision that I never wanted to be in debt again apart from a mortgage. If I cannot afford something I do not buy it, I save up and wait. 

What is scary is the levels of consumer debt, a third of holidays being brought on finance from the holiday provider, more being put on credit card, cars on finance, leases, from the rise of buy now pay later, to things like Klarna, the average credit card debt per household being £2,300, but with 55% of households having no credit card debt, meaning of those that do having nearly £5k on average. 

Scot_39

Spoonie_Turtle said:

Scot_39 said:

michaels said:

Surely it makes more sense to make benefits at the correct level and then let adults choose how they distribute their income based on their own priorities.  Energy is a great example - make it artificially cheap and people will be wasteful rather than improving insulation or putting on another sweater.

When the govt decided it would stop paying housing benefit direct to landlords - but to tenants - their income dropped sharply - as people simply didn't pass the money on.

You make the mistake of assuming benefits were set at the right level.  No doubt for many of those people, that was because the level of money left after rent was not enough to live on, so once they had more money coming in that they could use for food and other daily essentials they used it for that.  So setting benefits at a livable level would have prevented some of those cases.

Obviously not everybody, as we know some people at any income level really are just plain bad at managing money, but equally many of the best people at managing money tend to be people who've HAD to budget to the last penny, not people who've been financially comfortable all their lives.


.

The idea of a social tariff in general doesn't sit well with me, not so much the principle but the reality that many people are on a low income and do not qualify for means-tested benefits because the level of those benefits is so low.  You have people in poverty unable to claim any help because they earn just a tiny bit more than the threshold for their circumstances.  Any social tariff linked with claiming certain benefits would mean people who need it but only just don't qualify for the benefits would miss out yet again.

But in the article they talk about assessing it based on reality (rather than the government's existing dire thresholds) so it could in theory work … I don't hold out too much hope for it being implemented well, though.  It would need to be independent charities and research groups deciding on the criteria and thresholds, which I doubt the government would allow.

People were merely expected to pass on the additional £xx they were not getting before - that had previously been paid direct.

They weren't been given less money overall.  Those who spent it elsewhere spent more.

Arguably that means they needed more, but that depends on what they spent it on.

And as someone who grew up on a council estate - I can assure that the choices many made with their available cash - weren't the good ones you might like to think of.

Spoonie_Turtle

Scot_39 said:

Spoonie_Turtle said:

Scot_39 said:

michaels said:

Surely it makes more sense to make benefits at the correct level and then let adults choose how they distribute their income based on their own priorities.  Energy is a great example - make it artificially cheap and people will be wasteful rather than improving insulation or putting on another sweater.

When the govt decided it would stop paying housing benefit direct to landlords - but to tenants - their income dropped sharply - as people simply didn't pass the money on.

You make the mistake of assuming benefits were set at the right level.  No doubt for many of those people, that was because the level of money left after rent was not enough to live on, so once they had more money coming in that they could use for food and other daily essentials they used it for that.  So setting benefits at a livable level would have prevented some of those cases.

Obviously not everybody, as we know some people at any income level really are just plain bad at managing money, but equally many of the best people at managing money tend to be people who've HAD to budget to the last penny, not people who've been financially comfortable all their lives.


.

The idea of a social tariff in general doesn't sit well with me, not so much the principle but the reality that many people are on a low income and do not qualify for means-tested benefits because the level of those benefits is so low.  You have people in poverty unable to claim any help because they earn just a tiny bit more than the threshold for their circumstances.  Any social tariff linked with claiming certain benefits would mean people who need it but only just don't qualify for the benefits would miss out yet again.

But in the article they talk about assessing it based on reality (rather than the government's existing dire thresholds) so it could in theory work … I don't hold out too much hope for it being implemented well, though.  It would need to be independent charities and research groups deciding on the criteria and thresholds, which I doubt the government would allow.

People were merely expected to pass on the additional £xx they were not getting before - that had previously been paid direct.

They weren't been given less money overall.  Those who spent it elsewhere spent more.

Arguably that means they needed more, but that depends on what they spent it on.

And as someone who grew up on a council estate - I can assure that the choices many made with their available cash - weren't the good ones you might like to think of.

You miss my point.  If they were being left with not enough to live on before, when the rent was paid directly, it would be a person with the self-discipline of a saint who would pass on the same amount for rent and still live without the basic necessities once they were receiving the rent money themselves.

I acknowledge people don't always make wise choices.  The reasons for that are undoubtedly varied and complex, but the prevailing social narrative has been for years that people claiming benefits are all in poverty due solely to their own bad choices and thus are all scroungers and chancers who don't deserve help.  Which is just plain wrong.

Scot_39

Spoonie_Turtle said:

Scot_39 said:

Spoonie_Turtle said:

Scot_39 said:

michaels said:

Surely it makes more sense to make benefits at the correct level and then let adults choose how they distribute their income based on their own priorities.  Energy is a great example - make it artificially cheap and people will be wasteful rather than improving insulation or putting on another sweater.

When the govt decided it would stop paying housing benefit direct to landlords - but to tenants - their income dropped sharply - as people simply didn't pass the money on.

You make the mistake of assuming benefits were set at the right level.  No doubt for many of those people, that was because the level of money left after rent was not enough to live on, so once they had more money coming in that they could use for food and other daily essentials they used it for that.  So setting benefits at a livable level would have prevented some of those cases.

Obviously not everybody, as we know some people at any income level really are just plain bad at managing money, but equally many of the best people at managing money tend to be people who've HAD to budget to the last penny, not people who've been financially comfortable all their lives.


.

The idea of a social tariff in general doesn't sit well with me, not so much the principle but the reality that many people are on a low income and do not qualify for means-tested benefits because the level of those benefits is so low.  You have people in poverty unable to claim any help because they earn just a tiny bit more than the threshold for their circumstances.  Any social tariff linked with claiming certain benefits would mean people who need it but only just don't qualify for the benefits would miss out yet again.

But in the article they talk about assessing it based on reality (rather than the government's existing dire thresholds) so it could in theory work … I don't hold out too much hope for it being implemented well, though.  It would need to be independent charities and research groups deciding on the criteria and thresholds, which I doubt the government would allow.

People were merely expected to pass on the additional £xx they were not getting before - that had previously been paid direct.

They weren't been given less money overall.  Those who spent it elsewhere spent more.

Arguably that means they needed more, but that depends on what they spent it on.

And as someone who grew up on a council estate - I can assure that the choices many made with their available cash - weren't the good ones you might like to think of.

You miss my point.  If they were being left with not enough to live on before, when the rent was paid directly, it would be a person with the self-discipline of a saint who would pass on the same amount for rent and still live without the basic necessities once they were receiving the rent money themselves.

I acknowledge people don't always make wise choices.  The reasons for that are undoubtedly varied and complex, but the prevailing social narrative has been for years that people claiming benefits are all in poverty due solely to their own bad choices and thus are all scroungers and chancers who don't deserve help.  Which is just plain wrong.

So on that basis - not everyone being saintly - surely a very good reason not to pass it on direct  - and for state to try better to ensure the money goes on a basic human need  - like food, shelter, heat etc.

Other nations pay out benefits at least in part in vouchers - e.g. for food (and normally that excludes alcohol, tobacco etc in the same shop as accept vouchers).

Even middle managers - on by the country standards a moderate income  (but c min wage here) - were getting food vouchers in Slovakia when I worked there.

It was perfectly acceptable socially.

Here many liberal lobbyists have in past and would now argue it stigmatises people.

victor2

Educate these "vulnerable" people in ways to save energy, don't just give them money - at the expense of those who have already made the effort to reduce their usage - so that they can carry on living the way they do.

If they are deemed in need of support with their energy bills, give them (already controversial) prepayment meters and credit/reduced rates.

Exceptions can be made for those truly vulnerable who cannot reduce their usage because of medical equipment etc.

chris1973

Electricity prices in Jersey are currently 18p per kwh for both business and domestic and that is with the French making a profit on selling it to them. Their Electric Heating Tariff is cheaper than our mains Gas. In short we are in the top five Countries with the highest Electricity prices in the World.

Perhaps we should be spending time and effort in finding out how hundreds of other countries are all managing their energy prices far far better than us, despite sharing the same effects of the same war, viruses and the other hundreds of excuses the jolly boy millionaires in Government trot out.

That would make more sense than throwing more cash at the problem, and one we can ALL benefit from.

MattMattMattUK

chris1973 said:

Electricity prices in Jersey are currently 18p per kwh for both business and domestic and that is with the French making a profit on selling it to them. Their Electric Heating Tariff is cheaper than our mains Gas. In short we are in the top five Countries with the highest Electricity prices in the World.

Perhaps we should be spending time and effort in finding out how hundreds of other countries are all managing their energy prices far far better than us, despite sharing the same effects of the same war, viruses and the other hundreds of excuses the jolly boy millionaires in Government trot out.

Other countries subsidise energy to a greater or lesser extent, other countries have huge domestic energy reserves and are net exporters, other countries made mass investments in nuclear (France, Japan and others), some have a location more suited to renewable, others burn huge amounts of coal ignoring the climate impact. 

chris1973 said:

That would make more sense than throwing more cash at the problem, and one we can ALL benefit from.

We could pay enough taxes to fund investment in nuclear power, or build greater renewable capacity, but the UK electorate would rather pay low taxes and fail to invest.